We believe that these areas of the market may exhibit strong performance as rate volatility diminishes and mutual fund flows recover. While these parts of the market can exhibit volatility in periods of stress and underperformed in last year’s sell off, many have performed well since the start of the year. We continue to overweight Industrial Development issuers, lower quality investment grade bonds and non-investment grade credits and bonds subject to AMT.Along the same lines, we have been buying bonds with higher coupons and longer call protection to position in more favorable structures. Given the rate volatility, we have been selling callable bonds priced close to par to improve the convexity of the Fund and positioning the portfolio to have higher probabilities of performing better in a wide range of potential interest rate scenarios.Credit quality allocation reflects market value weightings. The credit quality breakdown is not an S&P credit rating or an opinion of S&P as to the creditworthiness of such portfolio. A-1/MIG1, A-2/MIG2 and A-3/MIG3 designations denote securities with less than a three-year maturity as well as superior (A-1/MIG1), strong (A-2/MIG2) and favorable (A-3/MIG3) credit quality. A portion of the portfolio's securities are not rated. Adverse conditions may affect the issuer's ability to pay interest and principal on these securities. High-yielding, non-investment-grade bonds (junk bonds) involve higher risks than investment-grade bonds. Credit ratings BB and below are lower-rated securities (junk bonds). Bonds rated BBB or above are considered investment grade. Ratings range from AAA (highest) to D (lowest). For a security with both a short-term and a long-term rating, Lord Abbett has categorized the security in the chart above using its short-term rating only. Where the rating agencies rate a security differently, Lord Abbett uses the higher credit rating. Ratings provided by Standard & Poor's, Moody's, and Fitch.
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