Morningstar

Lord Abbett Innovation Growth I GBP

Analyst Report
Morningstar's Take
|14/04/2025
by Drew Carter
Steve Wortman, a comanager on the US-domiciled Lord Abbett Growth Leaders fund (plus the US separately managed account and Ireland-domiciled fund) since 2022, will leave the firm at the end of February 2025. According to Lord Abbett, the move is for personal reasons. Wortman initially spent nine years at Lord Abbett as an analyst until 2014 and then rejoined in 2016. The firm does not plan to replace him, and Wortman’s stock coverage will be assumed by existing team members.

Four other managers will remain on Growth Leaders, including lead managers Tom O’Halloran and Matt DeCicco. With adequate support intact, this move does not affect the strategy’s Average People rating or its Morningstar Medalist Ratings.
 
The Lord Abbett Growth Equity strategy’s momentum-driven, aggressive-growth approach could leave investors in the lurch. This strategy includes a US-based fund (Lord Abbett Growth Leaders) and separate account, and an Ireland-based fund (Lord Abbett Innovation Growth). Changes in Morningstar Medalist Ratings here may be driven by an enhancement in how we assess alpha opportunity for funds, rather than changes to pillar ratings.

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 was a longtime analyst on this strategy before that. DeCicco now oversees the firm’s entire equity team, and he bolstered this team in August 2022. 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. Two team departures in 2024 were mitigated in part by the promotion of an associate to analyst.

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 informs 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%. Internet technology stocks have long dominated the portfolio; while the sector claimed 42% of the portfolio as of January 2025, that was about 4 percentage points underweight the Russell 1000 Growth Index. The portfolio’s 11-percentage-point allocation to healthcare was about 4 points over the benchmark, driven in large part by overweightings in biotechnology stocks Natera and Argenx.

Mixed since-inception performance belies significant swings from pummeling to lagging the index and category peers. Even investors brave enough to hang on over all the bumps haven’t been sufficiently rewarded. Better options exist.
 
Morningstar Medalist Rating™Streaky.
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Morningstar Pillars
PeopleAverage
ParentAverage
ProcessAverage
 
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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