| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.9% | 13.8% | 12.7% |
Lord Abbett's Developing Growth Fund returned 1.71% in Q4 2025, outperforming its Russell 2000 Growth benchmark's 1.22% return. The manager maintains conviction that the secular bull market for innovative growth stocks continues, supported by three key factors: the Federal Reserve cutting interest rates after pandemic inflation subsided, earnings proving resilient and broadening beyond the Magnificent 7 technology stocks, and secular productivity gains from generative artificial intelligence. The fund is finding quality investment opportunities across market capitalizations in favored innovation areas, including pioneering AI companies in semiconductors and software, industrial companies enabling datacenter expansion, and the emerging defense and space technology sector experiencing an inflection in autonomous systems. Health Care holdings, particularly precision oncology company Guardant Health, contributed to performance, while Consumer Discretionary and Consumer Staples selections detracted. Despite policy uncertainty and questions about AI spending returns, the manager emphasizes security selection of high-quality businesses with strong management teams positioned to navigate challenges and capitalize on AI productivity tools.
The secular bull market for innovative growth stocks continues, driven by Federal Reserve rate cuts, broadening earnings beyond mega-cap technology stocks, and productivity gains from generative artificial intelligence across multiple sectors.
The manager believes the secular bull market for innovative growth stocks continues, supported by Fed rate cuts, resilient earnings broadening beyond tech giants, and AI-driven productivity gains. They are finding quality companies across market caps in favored innovation areas including AI, defense, space technology, and various sectors benefiting from AI adoption.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 25 2026 | 2025 Q4 | BBIO, CELH, CRDO, CRS, FIX, GH, KTOS, LRN, MDGL, MOD, RDDT, RKLB, WGS | AI, growth, Health Care, industrials, innovation, small caps, technology | - | Generative artificial intelligence continues to provide markets an additional tailwind through productivity gains. Innovation is flourishing in pioneering Gen AI companies in semiconductors and software, as well as industrial companies enabling datacenter expansion and power infrastructure to support it. AI is also playing a role in the emerging defense and space technology sector. The defense and space technology sector is experiencing a positive inflection as a historically low growth area sees advancement in autonomous software and hardware systems. AI's role is particularly exciting in this emerging sector. Industrial companies are enabling datacenter expansion and power infrastructure to support the growing artificial intelligence infrastructure needs. Health Care sector contributed to relative performance, with significant allocations to precision oncology companies and pharmaceutical companies focused on specialized treatments. |
| Oct 15 2025 | 2025 Q3 | - | Artificial Intelligence, Growth Equities, innovation, semiconductors, small caps |
ASTR US KRAT US CSU US |
The Developing Growth Fund gained from strong security selection in tech and industrials, driven by holdings like Astera Labs and Comfort Systems. The managers see a secular bull market for innovative growth stocks powered by AI productivity and industrial infrastructure upgrades. They highlight expanding opportunities in defense, healthcare, and semiconductor software ecosystems. |
| Jul 15 2025 | 2025 Q2 | - | consumption, demographics, emerging markets, Governance, scalability | - | The letter highlights growth opportunities in developing markets supported by favorable demographics, urbanization, and rising consumption. Management emphasizes selectivity, focusing on companies with strong governance and scalable business models. Long-term structural growth is expected to outweigh near-term macro volatility. |
| Sep 30 2024 | 2024 Q3 | - | - | - | |
| Jun 30 2024 | 2024 Q2 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
BiotechnologyHealthcare industry positioned for catch-up growth after several years of below-trend performance. Government spending expected to increase relative to feared cuts, with companies signaling improvement in revenue growth. Focus on 'picks & shovels' businesses serving the industry. |
Life Science Tools Pharmaceuticals CRO & CDMO Healthcare Research | |
Data CentersSupply constraints curtailing infrastructure buildout rate, but compute capacity is being used immediately upon coming online. This differs from dot-com bubble when dark fiber was installed ahead of need. Labor, power and land shortages creating bottlenecks. |
Supply Constraints Utilization Bottlenecks Infrastructure | |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Innovation |
||
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
Emerging |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 15, 2025 | Fund Letters | F. Thomas O'Halloran | ASTR US | Astera Labs, Inc. | Other | Semiconductors | Bull | NASDAQ | AI, Connectivity, data centers, growth, hyperscalers, Margins, semiconductors | Login |
| Oct 15, 2025 | Fund Letters | F. Thomas O'Halloran | KRAT US | Kratos Defense & Security Solutions, Inc. | Other | Aerospace & Defense | Bull | NASDAQ | AI, Autonomy, Contracts, Defense, Drones, growth, Military | Login |
| Oct 15, 2025 | Fund Letters | F. Thomas O'Halloran | CSU US | Comfort Systems USA, Inc. | Information Technology | Engineering & Construction | Bull | NYSE | AI, construction, Electrification, growth, HVAC, infrastructure, Margins | Login |
| TICKER | COMMENTARY |
|---|---|
| BBIO | BridgeBio Pharma, Inc. Health Care 1.7 |
| CELH | One such idea that we bought in the last quarter is Celsius Holdings. We will refrain from a full writeup today, given Elliot recently presented at MOI Global's Best Ideas 2026 Conference. |
| CRDO | During the quarter, we initiated a position in Credo Technology. Credo is a high-growth semiconductor company that we view as a more diversified way to gain exposure to strong trends in AI-connectivity. |
| CRS | Carpenter Technology Corp. was one of the top five winners for the quarter. |
| FIX | An overweight position in Comfort Systems USA, Inc. (FIX) contributed to performance. The stock rallied after the company reported stronger-than-expected 3Q25 revenue, driven by robust demand for data centers and AI-related infrastructure. |
| GH | Guardant Health, a provider of blood-based diagnostic tests for cancer, performed particularly well, driven by strong Q3 results. Its core oncology business grew revenues 30% vs. 20% in the previous quarter, an acceleration driven by innovative product enhancements. Furthermore, its colon cancer screening tests continued to perform well, growing 50% sequentially from Q2. While shares were up significantly in 2025, we remain bullish on the business, as Guardant continues to lead the charge in converting oncology testing from tissue to blood. |
| KTOS | Kratos Defense & Security Solutions is a defense technology company focused on affordable unmanned systems, hypersonics and rocket systems, and satellite command-and-control, which we believe are increasingly aligned with U.S. and allied priorities around rapid fielding and scalable production. Kratos has invested deliberately in parts of the defense supply chain that we believe are increasingly critical to modern warfare and are now reaching an inflection point. Funding is beginning to flow into drone programs, demand for turbojet and turbofan engines is rising across unmanned aircraft and missile systems, and the company's C5ISR and space businesses continue to grow rapidly. While the company reported strong fiscal third-quarter operating results, shares detracted after management's fiscal fourth-quarter revenue outlook and free-cash-flow expectations came in below analyst estimates. Sentiment was further pressured by management commentary that cash receipts were being delayed due to the U.S. government shutdown, as well as ongoing cost headwinds tied to certain legacy unmanned contracts, which weighed on confidence in near-term margins and cash conversion. |
| LRN | Stride is an education technology company that provides online education to K-12 students through virtual public schools and learning programs. The stock sold off more than 50% on earnings due to a failed platform upgrade that resulted in major student enrollment losses, poor customer experience, and high withdrawal rates. Given the seasonality inherent in their business model (fall enrollment is the main driver of fiscal year results), investors quickly moved on with the lack of an imminent catalyst until next fall. We eliminated our position during the quarter. |
| MDGL | The Healthcare sector was once again led by Madrigal |
| RDDT | Reddit is a well-established internet company and community platform. The company has a loyal user base and opportunities to expand and monetize advertising, as well as leverage its treasure trove of data for a growing number of AI-related use cases. Recent deals with high-profile leaders in the AI/LLM arena (GOOG, OpenAI) have proven successful, parlaying into a growing user base and further interest from advertisers. We see great potential for Reddit to expand its relevance due to the rapidly growing secular opportunities, paired with product growth initiatives and fundamental company strengths. |
| RKLB | Rocket Lab is an end-to-end space company which engages in the development of rocket launch and control systems for the space and defense industries. The company operates in two primary segments: Launch Services and Space Systems. Launch Services provides rides into orbit for small satellites with their Electron rocket. Space Systems designs and manufactures spacecraft components, satellite buses, and offers mission operations and other space solutions. The stock was up nearly 50% in the quarter on a strong set of earnings results and a growing backlog. While we initiated a position later in the quarter, the lack of exposure for the better part of the period meant the stock represented a detractor to relative performance. |
| WGS | GeneDx is a genetic testing company that uses advanced whole exome and genome sequencing to diagnose rare genetic disorders faster, helping doctors create personalized treatment plans and improve health outcomes. The company delivered better-than-expected results—including raised full-year guidance—which was a function of a significant year-over-year increase in high value exome and genome testing volumes and meaningful improvements in insurance reimbursement rates. |
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