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A Closer Look at Two Similar Bank-Loan Funds

Thu, 28 Sep 2017

Lord Abbett Floating Rate and Eaton Vance Floating Rate are both great medalist funds, but team tenure and process distinguish them.


Video Transcript

Kenneth Oshodi: Lord Abbett Floating Rate and Eaton Vance Floating Rate are two Bronze-rated bank-loan funds here at Morningstar. Both are quite good, but different in many ways.

To start, Eaton Vance has one of the longest-tenured management teams in the category. Scott Page and Craig Russ each have decades of experience in the bank-loan industry, and Page has been the manager on this fund since its January 2001 inception. Lord Abbett's management team, on the other hand, is less experienced. Jeffrey Lapin began leading this effort in July 2012; his comanagers Robert Lee and Steven Rocco joined him in October 2013 and April 2016, respectively.

Each fund's process focuses on fundamentals and takes some macroeconomic cues, but Lapin and team have more heavily integrated the two, at times freely moving the portfolio across the credit spectrum and into and out of industries. Russ and Page take a more measured approach to the market, with less drastic sector variations and consistently less exposure to lower quality CCC-rated loans.

This has all boiled down to top third annualized returns for both funds versus bank-loan Morningstar Category peers over the trailing five years ending Aug. 31, 2017, with Lord Abbett's strategic positioning, steadier return stream, and much lower fees giving their portfolio an edge during that stretch.

All in all, these are two great medalist funds. But they're quite different upon closer inspection.

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