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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Agentic artificial intelligence applications are expanding infrastructure demands from accelerated computing into networking, memory, and data centers."
During the third quarter of 2026, the Lord Abbett Developing Growth Fund returned -17.38% net of fees for Class I shares, trailing its benchmark Russell 2000 Growth Index, which returned -9.39% net, as well as the Morningstar Small Growth Funds Category average of -9.59%. Relative underperformance was driven primarily by security selection in the Industrials sector, notably Cardinal Infrastructure Group, Inc., and Information Technology, led by Amkor Technology, Inc. Conversely, positive relative contributions stemmed from security selection in Health Care, driven by an overweight in 10x Genomics Inc., and Communication Services via IMAX Corporation. The macroeconomic backdrop featured mixed equity markets as large-cap growth indexes outperformed amid deteriorating overall market breadth. While software fundamentals demonstrated resilience and energy equities gained on Middle East geopolitical friction, the broader artificial intelligence trade cooled following prior strength. Persistent inflation and resilient economic activity prompted Federal Reserve monetary tightening, sending Treasury yields sharply higher. These elevated borrowing costs, paired with geopolitical tension and historically narrow leadership, generated an increasingly challenging backdrop that widened performance dispersion between industry winners and losers. The investment strategy focuses on businesses capitalizing on secular innovation with durable earnings power and disciplined capital allocation. Key high-conviction active overweight holdings include 10x Genomics Inc. at 3.10% of the portfolio, Twist Bioscience Corp. at 2.69%, Guardant Health, Inc. at 2.64%, JFrog Ltd. at 2.52%, DigitalOcean Holdings, Inc. at 2.34%, Adaptive Biotechnologies Corp. at 2.13%, Navan, Inc. at 1.95%, and IMAX Corporation at 1.88%. These allocations reflect secular exposure across expanded artificial intelligence infrastructure, software, diagnostics, and next-generation healthcare platforms.
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