Market Sector Update
- Outside the U.S., widespread policy
easing by global central banks and
weakening currencies resulted in stronger
flows into U.S. Treasuries and equities.
Bond prices and equities ended the
- The effects of a stronger U.S. dollar
weighed on company earnings and
revenue guidance for U.S.
multinationals, but were beneficial for
European and Japanese companies.
- The U.S. Federal Reserve (Fed) removed
the word “patient” from its March
statement, but said interest rates would
not rise until inflation is closer to its
target. Many now do not expect a rate
increase until the second half of 2015.
- The European Central Bank
implemented a quantitative easing (QE)
program. Europe has negative interest
rates in some shorter duration fixedincome
instruments. Credit markets
responded with the majority of
investment grade, euro-denominated
corporate bonds yielding less than 1%.
- Given the environment of low interest
rates and low growth, mergers and
acquisition activity was very robust,
particularly in healthcare and consumer
- The Fund had a positive return for the
quarter that was above its all-equities
benchmark index (before the effect of
- The Fund’s largest allocation was to
equities, ending the quarter at 79% of
total assets, with U.S. equities
representing about 55% of total assets.
It had about 4.6% in fixed-income
securities, about 7% in gold bullion and
just less than 10% in cash.
- The five largest sector allocations were
information technology, consumer
discretionary, health care, consumer
staples and energy.
- Holdings in the financials, energy,
information technology, utilities,
materials, industrials and health care
sectors all were contributors to relative
performance during the quarter. The
consumer discretionary sector was the
largest detractor from relative
- We believe U.S. economic trends
remain positive relative to the rest of the
world, although payroll data has taken
on more significance with a datadependent
Fed. Europe’s most recent
economic data have shown
improvement and China’s slowing
economy has resulted in recent
additional stimulus measures. Greece’s
membership in the Eurozone remains
unresolved because of its ongoing debt
problems, but we do not think there is
real interest in a “Grexit.”
- U.S. equities have moved higher for
more than six years, but much anxiety
remains in the markets and investors
are paying a premium for protection.
- We continue to believe equities offer
the best alternative for generating
returns in this low-growth, low-interest
rate environment. We think fears in the
market and resulting volatility will
create opportunities to add exposure
in the Fund, favoring names where we
have high conviction in long-term
- In our view, global overcapacity
suggests continued downward
pressure on inflation and we expect
interest rates to remain very low for
The opinions expressed in this commentary are those of the Fund’s managers and are current through March 31, 2015. The managers’ 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. 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. The Fund may allocate from 0 to 100% of its assets between stocks, bonds and short-term instruments of
issuers around the globe, as well as investments in precious metals and investments with exposure to various foreign securities. International investing involves additional risks, including currency
fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Fixed-income
securities are subject to interest-rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest
or principal than higher-rated bonds. The Fund may focus its investments in certain regions or industries, thereby increasing its potential vulnerability to market volatility. The Fund may seek to hedge
market risk on various securities, increase exposure to various markets, manage exposure to various foreign currencies, precious metals and various markets, and seek to hedge certain event risks on
positions held by the Fund via the use of derivative instruments. Such investments involve additional risks, as the fluctuations in the values of the derivatives may not correlate perfectly with the overall
securities markets or with the underlying asset from which the derivative’s value is derived. Investing in commodities is generally considered speculative because of the significant potential for investment
loss due to cyclical economic conditions, sudden political events, and adverse international monetary policies. Markets for commodities are likely to be volatile and the Fund may pay more to store and
accurately value its commodity holdings than it does with the Fund’s other holdings. 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 financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully before investing.