Waddell & Reed

Quarterly Fund Commentary

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

W. Jeffery Surles, CFA

Market Sector Update

  • Volatility continued to be an overriding theme during the quarter as both equity and riskier parts of the fixed-income market corrected sharply.
  • China was again one of the epicenters for the heightened volatility. Chinese currency devaluation as well as uncertainty over the timing of the U.S. Federal Reserve (Fed) rate hikes drove sharp market reactions throughout the quarter.
  • Increased volatility, concerns over global growth and deflation fears from lower commodity prices drove risk-free interest rates sharply lower in developed-market countries.

Portfolio Strategy

  • The Fund underperformed its blended benchmark during the quarter. While the equity portfolio slightly underperformed its benchmark, the fixed-income portion of the portfolio significantly underperformed. We have long been overweight credit in the fixed-income portfolio, which drove the underperformance relative to the benchmark. Our asset allocation, which saw us overweight equities, also proved a drag as equities underperformed during the quarter.
  • We reduced our overweight to equities during August as markets became significantly more volatile. At quarter end, our asset allocation stood at 62% equity, 35% fixed income and 3% cash, which is down from a 70% equity weighting at the end of the second quarter.
  • Within equities, we mainly reduced our exposure to more cyclical stocks and commodity names, with several large integrated oil companies leaving the portfolio. As we shifted to fixed-income securities, we mainly focused on bonds with idiosyncratic risks such as yield-to-call securities or bonds with high likelihoods of being tendered for.


  • We expect heightened volatility to continue in riskier asset prices as investors continue to grapple with slowing global growth and uncertainty over Fed policy. We have a slight bias to continue lowering our equity exposure. We are trying to balance the desire to reduce equities with the fears and volatility in many parts of the fixed-income markets where we traditionally participate. This has us continually focused on putting new money to work in bonds with idiosyncratic risks.
  • While we do believe the global environment is slowing, we think chances of recessionary conditions in most of the large developed economies are remote, which has us gradually adjusting our asset allocation rather than making more dramatic shifts.


The opinions expressed in this commentary are those of the Fund’s manager and are current through September 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.

Financial Advisor Opportunities
Corporate Careers