Waddell & Reed

Quarterly Fund Commentary

Ivy Global Income Allocation Fund (prospectus)
June 30, 2015

W. Jeffery Surles, CFA

Market Sector Update

  • Volatility across almost all asset classes became an overriding factor as a number of risks came to the forefront during the quarter.
  • Both Greece and China provided reasons for riskier asset markets to reprice downwards, while perceived safer asset classes displayed large amounts of volatility as investors balanced those risks against the prospect of U.S. Federal Reserve rate hikes.
  • Somewhat surprisingly, the U.S. dollar weakened slightly as it belied its usual safe-haven status during times of increased volatility and risk reduction.

Portfolio Strategy

  • The Fund slightly outperformed its blended benchmark (before the effects of sales charges) during the quarter. Both the equity and fixed-income portfolios outperformed their respective benchmarks. Our overweight in equities slightly detracted to performance as the fixed-income portion of the Fund marginally outperformed the equity portfolio. Currency hedging, being done mainly to limit volatility and bring currency exposure closer to benchmark weights, acted as a small drag on performance.
  • Near the end of June, we increased currency hedges that had been reduced the previous quarter given the increased uncertainty surrounding the situations in both Greece and China.
  • Our asset allocation was largely unchanged during the quarter with the Fund remaining roughly 70% equity and 30% fixed income. The equity portfolio has become slightly more concentrated as valuations have risen and we prefer to give our highest conviction names higher weights. Credit quality of the fixed-income portfolio has risen slightly as we replaced lower-quality maturing bonds with higher-quality securities.
  • The portfolio continues to have large equity and fixed-income weightings in Europe.


  • Uncertainty over the global growth environment has changed materially the past couple of weeks. Risks caused by a potential Greek default and its impact on the stability of the euro, and an alarming drop in segments of the Chinese equity markets have us examining our allocations more carefully.
  • We are more constructive on the situation in Europe and Greece than we are with the situation in China. This has caused us to keep our European exposure intact. Regardless of the outcome to the latest Greek saga, we expect the European Central Bank to remain extremely accommodative and possibly have an additional easing bias.
  • This, coupled with a financial sector less exposed to Greek asset risk and more contained contagion risk to other countries in the periphery, leave us less concerned with the situation in Europe. The situation in China looks more complicated and raises broader questions about the strength of the Chinese economy.


The opinions expressed in this commentary are those of the Fund’s manager and are current through June 30, 2015. 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. 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. International investing involves additional risks including currency f uctuations, political or economic conditions l 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 risks and, as such, the net asset value of the Fund may fall as interest rates rise. Dividend-paying investments may not experience the same price appreciation as non-dividend-paying instruments. Dividend-paying companies may choose not to pay a dividend, or dividends may be less than was anticipated. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Not all funds or fund classes may be offered at all broker/dealers. These and other risks are more fully described in the Fund’s prospectus.

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.

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