Waddell & Reed

Quarterly Fund Commentary

Ivy Global Bond Fund (prospectus)
March 31, 2015

Mark G. Beischel, CFA

Market Sector Update

  • Inflation has generally continued to surprise on the downside. Although wage growth is still generally subdued in the U.S., inflation and market developments remain on track for a first rate hike in September.
  • The United Kingdom outperformed Europe with a 3% growth rate in 2014. There is enough momentum to sustain this rate throughout 2015. After much speculation about the Bank of England raising rates, the market is now discounting a rate hike in the second half of the year.
  • The euro area’s policy response to the stalling recovery and threat of deflation has led the European Central Bank (ECB) to engage in a quantitative easing (QE) program buying €1.1 trillion in governmental securities.
  • The Japanese economy is still adjusting to the large increase in the value-added tax which occurred in April.
  • The Chinese economy has weakened because of a downturn in residential real estate sector and slower growth of capital spending.
  • The collapse in oil prices over the past quarter has put pressure on oil producing emerging market countries such as Russia, Brazil, and Venezuela.

Portfolio Strategy

  • We continue to seek opportunities to reduce the volatility in the Fund.
  • We are maintaining a low-duration strategy for the Fund as it allows us a higher degree of certainty involving those companies in which we can invest.
  • We continue to focus on maintaining proper diversification for the Fund.
  • We look for opportunities to make longterm investments in foreign currencies in certain emerging markets should they weaken versus the dollar.
  • We continue to hold a higher level of liquidity (patient capital) because of structural changes in the capital markets. We will be opportunistic in allocating that capital when dislocations in market arise.


  • The U.S. economy is growing at a rate close to its underlying trend, or about 2.5%. Unfortunately it is not growing quickly enough to use up excess capacity that has accumulated since the beginning of the crisis several years ago.
  • Given our expectation of slow growth in the developed world in 2015, we expect short-term interest rates to remain low overall as the Fed keeps the policy rate low for an extended period of time. Developed markets such as the U.S., Japan, and U.K. are likely to grow a little more in 2015 than they did in 2014.
  • Longer Treasury rates will be more volatile and subject to market emotions regarding fiscal and monetary policies.
  • The U.S. continues to be a safe haven globally, and will continue to attract funds from outside the U.S. In this scenario, there will be opportunities to make long-term investments in foreign currencies in certain emerging markets should they weaken versus the dollar.
  • The ECB is concerned about disinflation. It has less room to maneuver, and consequently may be once again late to the party. The Bank of Japan is contemplating more additional QE later this summer. This all bodes well for the U.S. dollar.


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. International investing involves additional risks including currency f uctuations, l political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. 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. 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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