Archive for 'July 2015'

    Why the Pall Over Malls is Overblown

    July 31, 2015 3:35 PM by Lord Abbett Editorial Staff

    Are malls doomed by e-commerce, as some pessimists have suggested? You’d never know it to look at the performance of regional mall real estate investment trusts (REITs). 

    Will the explosive growth of shopping over the Internet spell ruin for regional shopping malls?

    Clearly, some well-known retailers have failed or closed a number of mall locations in recent years for a variety of reasons, as more shoppers made their purchases online, hurting weaker quality malls, said Lord Abbett REIT analyst Steve Benyik.

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    New Exception to Early-Distribution Penalty

    July 31, 2015 9:10 AM by Brian Dobbis

    New law extends the exceptions on early-distribution penalties to federal employees and includes all governmental retirement plans.


    On June 29, 2015, President Barack Obama signed a law that expands the universe of retirement plans that will not be subject to the 10% early-distribution penalty. The "Defending Public Safety Employees’ Retirement Act" broadens both the number of workers and the types of plans eligible for the exception.

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    El Nino: The Agricultural Sector Prepares for Impact

    July 30, 2015 2:50 PM by Lord Abbett Editorial Staff

    After a five-year absence, the El Niño weather phenomenon is back, and it may have far-reaching effects on the world’s agriculture markets.

    For some investors, events in Greece and China may take a backseat to another, more natural phenomenon: the warming of the ocean waters in the central and eastern tropical Pacific Ocean, an event better known as El Niño. As unpredictable as the weather can be, when an El Niño occurs, the location of some of that year’s biggest weather anomalies can be predicted with a higher degree of certainty than would normally occur during a year without an El Niño. And that’s important information for everyone involved in the agribusiness, including those who invest in it.

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    Equities: An Approach that Never Goes "Out of Style"

    July 24, 2015 1:50 PM by Joseph M. Graham, CFA

    New research reveals that style inconsistency leads to underperformance, echoing the findings on active share.

    The papers on active share by Martijn Cremers and Antti Petajisto1 have received a lot of attention in the industry, and here at Lord Abbett (see here, here, and here)—and for good reason.  Active share, when used in combination with tracking error, enabled the identification of a class of mutual fund managers that, on average, have outperformed their benchmarks. Cremers and Petajisto called this group “Diversified Stock Pickers.”

    But Cremers and Petajisto aren’t the only researchers to discover the phenomenon that has enabled this group to outperform. 

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    Millennial Consumers Reach an Inflection Point

    July 24, 2015 10:25 AM by Lord Abbett Editorial Staff

    As a group, millennials outnumber baby boomers. Their incomes are climbing. And some experts expect them to account for one-third of all retail spending in the next five years.

    Of all the investment themes that emerged during Lord Abbett’s recent research presentations, the rising influence of Generation Y, born 1980–2000, may have resonated the most.

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    Retirement for the Ages

    July 23, 2015 1:57 PM by Brian Dobbis

    After spending most of your adult life saving for retirement, the last thing you want to do is make a mistake that will jeopardize your carefully constructed nest egg. Just remember three key ages.


    Retirement-planning rules can be complicated, but ignoring or misunderstanding them can be costly—in terms of financial penalties and/or lawyers and accountant fees, not to mention considerable time. You get the picture.  Considering that there are more than 40 million IRA accounts containing some $7.6 trillion in assets, and given the many types of IRAs—Roth, traditional, SIMPLE, SEP, SAR-SEP, rollover, inherited, etc., each with their own rules—it’s little surprise that errors occur all the time.

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    Global M&A on a Roll

    July 17, 2015 4:40 PM by Lord Abbett Editorial Staff

    With a combination of low interest rates, collapsing oil prices, and the search for new drugs in the pharmaceutical industry, mergers and acquisitions have surged to a near-record pace.  

    Let us prey. Pardon the pun, but this phrase seems a fair description of the mindset behind the staggering level of mergers and acquisition (M&A) activity. Led by a resurgence of deals totaling more than $5 billion, the value of worldwide M&A hit $3.5 trillion during 2014, a 47% increase over 2013, marking the strongest year for deal making since 2007, Thomson Reuters reports.1 And volumes in 2015, propelled by record valuations in the United States,2 could be even higher.

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    Fixed Income: The 2015 Halftime Report

    July 17, 2015 12:40 PM by Robert Lee

    Robert Lee, Lord Abbett Partner & Director, discusses the outlook for the economy, the U.S. Federal Reserve, inflation, and interest rates.

    The second half of 2015 is here, and with it come a number of pressing questions for fixed-income investors. My colleague Andrew O’Brien and I held a web conference with financial advisors on July 16 to share our views on the current market environment and what may lie ahead for the sector. I’d like to summarize some of our key points here for those who missed the conference, or for those participants who would like to share these insights with others.

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    Payroll Deduction IRAs: A Win-Win for Workers and Employers

    July 17, 2015 10:15 AM by Brian Dobbis

    These savings vehicles cost employers nothing and give employees full control over their investments as they build their nest eggs. Everybody wins.


    Advisors who want to appeal to small-business owners looking for an easy, flexible, and cost-efficient way to help their employees save for retirement would do well to consider a payroll deduction IRA

    The plans are easy to set up and maintain, and can be established by employers of any size, including self-employed individuals and sole proprietors. 

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    Complexity of Cybersecurity Threats Is Rising

    July 15, 2015 10:15 AM by Rick Vallieres, CFA

    Can "private cloud" solutions mitigate such vulnerabilities? 

    High profile cybersecurity breaches are making headlines and the volume of attacks on institutions is rising as much as 50% per year. Meanwhile companies are turning to new technologies and approaches to defend against increasingly sophisticated attacks (see Table 1). A cybersecurity arms race is under way.

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    Earn and Learn with the Coverdell Education Savings Account

    July 9, 2015 4:30 PM by Brian Dobbis

    With education expenses hitting family budgets harder than ever, the tax-advantaged Coverdell Education Savings Account offers important lessons.


    As the cost of education continues to rise, families should make investing for educational expenses part of their financial plan. It’s important to begin saving early—and often—to meet the challenge of paying for education. After all, next to retirement planning, funding a primary, secondary, or college education could be one of the largest financial commitments a family makes. 

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    Bellying Up to Bars and Restaurants

    July 6, 2015 4:10 PM by Lord Abbett Editorial Staff

    Dining out continues to eat away at food and beverage sales.

    If you want to know why Lord Abbett has had a positive view on the restaurant sector, look no further than the industry’s long, steady expansion, driven by an improving economy.

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    Puerto Rico: What Happens Next?

    July 2, 2015 2:20 PM by Daniel S. Solender, CFA

    Here’s an assessment of the possible fallout from Governor Garcia Padilla’s statement that the commonwealth will be unable to pay its $72 billion in municipal debt. 

    Puerto Rico’s fiscal challenges have been in the news for a couple of years, but on June 28, the commonwealth’s governor, Alejandro Garcia Padilla, made comments that put even further stress on its $72 billion in municipal bonds.

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    Help Your Child Gain Independence - Fund a Roth!

    July 2, 2015 12:41 PM by Brian Dobbis

    It’s never too early to start saving for retirement. Young adults can establish a Roth IRA as soon as they start earning an income, and they don’t have to put their own money into it.


    Looking for a unique way to celebrate Independence Day with your children or grandchildren? Consider funding a Roth IRA now. It may not set off fireworks, but the end result could spark some celebration.

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