Market Sector Update
- We have seen compression in yields, but overall corporate high yield bonds remain robust.
- Corporate profitability remains strong. The strong corporate fundamentals underpin strong debt service by corporate borrowers, and that translates into low default rates.
- As we have seen in recent quarters, most issuance is refinancing.
- With extremely accommodative Federal Reserve (Fed) policy, demand for highyield credits remains strong, particularly from buyers such as pension plans and insurance companies.
Portfolio Strategy
- This is a credit fund and our tenets about the type of companies in which we invest remain consistent.
- We are agnostic in terms of credit ratings. We look for strong business models with stable cash flows and high recurring revenue streams and revenue mixes.
- We strive to be opportunistic and deploy capital when it is the most advantageous.
Outlook
- At current levels, non-investment-grade corporate credits continue to remain attractive when compared against other areas of the fixed income market.
- We expect the Fed to continue providing exceptionally easy monetary policy which will create a range-bound environment.
- Although there may be bouts of market volatility, we do not expect a significant downside scenario in the near term based on Fed policy and the macroeconomic perspective.
The opinions expressed in this commentary are those of the Fund’s manager and are current through March 31, 2013. 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 high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. In addition to the risks typically associated with fixedincome securities, loan participations in which the fund may invest carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loan participations 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 financial advisor or visit us online at www.ivyfunds.com. Please read the prospectus or summary prospectus carefully before investing.