Market Sector Update
- In the U.S., we expect the decline in
unemployment and increase in inflation
will spark speculation on when the
Federal Reserve (Fed) will raise interest
- The Bank of England (BOE) could be the
first central bank to raise interest rates
this year as signs of a property bubble
are a cause of concern for Gov. Mark
Carney. The bank is going to try and
slow down housing appreciation through
different macro-prudential policie,s but
we believe in the end it will need to
adjust its policy rate.
- The European Central Bank (ECB)
confirmed market expectations by
reducing interest rates and imposing a
negative 10 basis-point interest rate on
excess reserves held by the bank. It also
announced another lending program
and is examining an asset-backed
- The Bank of Japan (BOJ) will increase its
asset-purchase program as a result of
the slower growth from the value added
tax (VAT) hike during April. We believe
the BOJ will remain on the sidelines if
the economy does rebound.If the
economy does not improve, we expect
the bank to be more stimulative.
- We believe China will achieve its
projected 7.5% growth rate this year.
China continues to go through its
structural changes that are depressing
- 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
- 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 because of structural changes
in the capital markets. We will be
opportunistic in allocating that capital
when dislocations in the market arise.
- The U.S. economy is growing at a rate
close to its underlying trend, or about
2% to 2.5%. Unfortunately it is not
growing quickly enough to use up
excess capacity that has accumulated
since the beginning of the crisis several
- Given our expectation of slow growth
in the developed world in the second
half of 2014, we expect short-term
interest rates to remain low overall as
the Fed keeps the policy rate low for
an extended period of time.
- We believe that developed markets
such as the United States, Japan, and
the United Kingdom are likely to grow
a little more in 2014 than they did in
2013. The eurozone’s growth looks to
- We expect longer Treasury rates will be
more volatile and subject to market
emotions regarding fiscal and
monetary policies. The Fed’s decision
on reducing its pace of asset
purchases was predicated on
improving economic data. We are
looking forward for the Fed to engage
in further reductions over the
remainder of 2014 as long as the
economic data supports it.
- 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 opinions expressed in this commentary are those of the Fund's manager and are current through June 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. 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.