Lord Abbett Innovation Growth A USD |
Morningstar's Take
|01/05/2024by Drew Carter
| Benjamin Ebel and Steven Wortman have joined the management team at Lord Abbett Growth Leaders, the firm announced. The strategy is still led by Tom O'Halloran, with assistance from equities head Matt DeCicco and comanager Vernon Bice. Ebel and Wortman were added to reflect their contributions to the team. Ebel, a tech and telecom analyst, and Wortman, who covers consumer, industrials, and financials, were named comanagers in September 2022 on Lord Abbett Growth Opportunities LMGAX. In September 2020, Ebel was named a comanager on Lord Abbett Developing Growth LAGWX, and Wortman joined Lord Abbett Micro Cap Growth LMIYX at that time. They've spent 17 and 16 years at the firm, respectively. Because the move doesn't indicate a substantial change in resources, the strategy's Average People rating still applies, as do the Morningstar Analyst Ratings of Neutral for most share classes and the Negative rating on its Ireland-domiciled vehicle's most expensive share class. |
| The Lord Abbett Growth Equity strategy’s momentum-driven, aggressive-growth approach could leave investors in the lurch. Experienced managers here boosted resources, but the team still doesn’t stand out in a competitive Morningstar Category. Tom O’Halloran joined as a manager in 2001 and has led the strategy since March 2003. Matt DeCicco became a manager much later (December 2017) but he was a longtime analyst on this strategy before that. DeCicco now oversees the firm’s entire equity team, and in an August 2022 reshuffle he dealt himself a good hand here. DeCicco added three analysts (one a replacement), bringing the team to 11, up from nine two years earlier. Still, the team remains modestly sized among large-cap competitors, and its experience and expertise are stronger among smaller stocks, where its size is also more competitive. Rollercoaster performance comes from a process that leans on momentum in fast-growing companies; investors should be prepared to ride out both highs and lows. The managers blend fundamental stock data with technical trading inputs, favoring firms within the Russell 1000 Growth Index's market-cap range with strong growth potential and rising stock prices. They look to buy stocks after positive news in hopes of capitalizing on an unfolding trend. Momentum data also inform sell decisions. O’Halloran monitors holdings' technical data (such as 150-day moving average prices) to pick points to add and trim, with the portfolio typically trading at a higher valuation than its benchmark. Turnover typically tops 100%. IT stocks have long dominated the portfolio and continued to claim more than 47% of the portfolio as of February 2024, with chipmaker and AI darling Nvidia’s 11% weighting its largest position. The industrials sector became its largest active position over the past year, with the addition of transportation names Uber and Saia. Mid-caps like Saia often claim twice the weighting in this portfolio versus that of the benchmark, which has dragged on returns in recent years as smaller names have lagged large- and mega-cap stocks. Since inception, the US fund’s institutional shares have topped their typical large-growth peer but lagged the index. That, plus lurching between out- and underperformance, suggest that investors can find better alternatives. |
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| Morningstar Pillars | |
| People | Average |
| Parent | Average |
| Process | Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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