Market Sector Update
- Spreads between high-yield bonds and
Treasuries widened around 90 basis
points during the quarter. It is our view
that the widening was not due to market
fundamentals, but instead related to
numerous factors including geopolitical
events, technical factors, the
macroeconomic outlook and Federal
- Issuance picked up significantly after
Labor Day, with $25 billion in new
issuance priced into the market during
the first two weeks after the holiday,
according to Wells Fargo data.
Conversely, a total of only $4.5 billion
was priced into the market during the
entire month of August.
- Our investment process is based on
research of the individual opportunities.
We seek good risk/reward characteristics,
particularly related to companies that we
believe the market does not understand
or which generate outsize yield related to
- We believe that credit selection is the
basis for above-average performance
through a credit cycle and believe it to
be preferable versus attempting to time
the market or place macro bets.
- We believe that the high-yield space
has become more attractive from a
valuation perspective. Wider spreads
have created an opportunity to put new
money to work in high-yield, which we
believe offers the best value in the credit
- We will look to reduce our first lien
loan exposure and move into what we
perceive to be better opportunities as
they become available in the market.
- We expect there may be more volatility
in the market due to interest rate
speculation as the Federal Reserve
concludes its stimulus program known
as quantitative easing.
The opinions expressed in this commentary are those of the Fund’s manager and are current through September 30, 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. 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. 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 below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Loans (including loan assignments, loan
participations and other loan instruments) carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loans may be unsecured or not fully collateralized may be subject
to restrictions on resale and sometimes trade infrequently on the secondary market. 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 i before investing.