Quarterly Fund Commentary
Ivy Mid Cap Growth Fund
December 31, 2014
Kimberly A. Scott, CFA
Market Sector Update
- Mid-cap growth stocks finished the year strong.
- Most economic sectors outperformed the Fund’s benchmark in the quarter, but the most dramatic performance hinged on the rapid decline in the price of oil, with the energy sector delivering a strong decline.
- Consumer discretionary and consumer staples were the most immediate beneficiaries of the commodity price decline. Both outperformed the index by the greatest margin.
- Health care and utilities, both relatively defensive areas, outperformed the Fund’s benchmark, as did financials and industrials. Technology performed reasonably in line.
- The Fund outperformed the benchmark in the quarter before the effects of sales charges. Strong performance in our health care and consumer discretionary names were contributors.
- All of our health care names increased in value, and all but one, outperformed the benchmark. Most of our biotechnology stocks were standouts in the quarter.
- Consumer discretionary was another area of extreme strength. Strength was broad-based as the benefits to the consumer of stronger employment growth in the U.S. and the rapid decline in the price of oil became clear.
- Our energy names were weak across the board, as the swift decline in the price of oil since June, but most notably within the fourth quarter, became a woodshed moment for the group generally. We retain our energy positions and look to add exposure as opportunities present themselves.
- Our industrials group had a negative contribution to quarterly returns. Our financials, technology and consumer staples groups all made modest negative contributions to overall performance.
- We were underweight the outperforming consumer staples sector, which was the source of slight underperformance.
- Our lack of exposure to utilities, which strongly outperformed the benchmark, was a slight negative to performance
- We have made some changes in our industrials exposure to mitigate the impact of the weak price of oil, but we believe the concern is largely embedded in the stock prices of most of our industrial and energy names. At this point, we are patiently looking for opportunities to take advantage of an improved outlook for these groups.
- We have made a lot of progress in our health care exposure. We have added what we consider to be more stable and less risky biotechnology positions to the portfolio, in addition to increased exposure to medical technology and health care capital equipment stocks that should benefit from greater utilization of health care related to strengthening employment and the Affordable Care Act. Health care is currently the Fund’s most substantially overweight sector..
The opinions expressed in this commentary are those of the Fund’s manager and are current through Dec. 31, 2014. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. Past performance is no guarantee of future results.
Risk factors. As with any mutual fund, the value of the Fund’s shares will change, and you could lose money on your investment. Investing in mid-cap growth stocks may carry more risk than investing in stocks of larger more well-established companies. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. These and other risks are more fully described in the Fund’s prospectus. Not all funds or fund classes may be offered at all broker/dealers.
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For a prospectus, or if available a summary prospectus, containing this and other information for the Ivy Funds, call your f nancial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully before investing.