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Lord Abbett carves niche




Growth and income by investing in larger UK companies

Minimum investment:
Lump sum £1,000, monthly £50

Investment split:
23.57% financials, 11.92% energy 11.63% consumer staples, 11.57% healthcare, 11.56% telecommunication services, 10.09% consumer discretionary, 8.98% utilities, 4.2% materials, 1.85% information technology, 4.63% cash

Isa link:

Pep transfers:

Initial 5%,
annual 1.5%

Initial 3.5%,
renewal 0.6%

Tel: 020 7743 6640

Lord Abbett & Co, the UK subsidiary of US investment manager Lord Abbett Limited, has brought out the CF Lord Abbett UK Growth & Income fund. This is an Oeic that invests in larger well-known UK companies such a Vodafone, BP and AstraZeneca.

Capital Trust Financial Management partner Bruce MacFarlane thinks this is a fund to watch out for in the future. MacFarlane initially felt that there is little need for yet another growth & income fund in an already saturated sector, but rang Lord Abbett to ask about its rationale for launching this fund. He says: “I spoke to Richard Sieling, partner and managing director at Lord Abbett, who brought my attention to some interesting background information. The fund was launched to fill a gap in Lord Abbett&#39s product range. The fund, unlike many other
funds in the sector, had been seeded by the 46 partners who privately own Lord Abbett and it is still quite small at around £3.5m. Seiling sees the fund as a complement to other funds in the sector.”

MacFarlane points out that the portfolio focuses on around 40 stocks and uses a bottom-up approach to research. He says: “The fund aims to identify companies that are trading at a significant discount to their intrinsic business value. The investment process is highly disciplined and the fund should be attractive to an investor looking for a combination of growth over the longer term with a measure of income along the way.”

Considering the negative features of the fund MacFarlane says: “The fund is a vanilla product and rather unsexy. Having analysed its top 10 holdings there seems little to differentiate it from many of the other funds in the same sector. Investment outperformance is perhaps the best tool in its armoury. However this outperformance is unlikely if the management team continues to replicate the holdings of their peers.” He adds that Lord Abbett would not be a widely-known name to the investing public and as such, the company may have difficulty attracting money to the fund from the retail sector.

Finally, MacFarlane ponders on the question of which funds are likely to be worthy competition for the fund. He concludes: “Probably all the better known fund groups in the income and growth sector with established track records.”


Suitability to market: Average
Investment strategy: Average
Charges: Average
Adviser remuneration: Good

Overall 6/10


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