Market Sector Update
- International markets underperformed
during the quarter and returns were
dampened by U.S. dollar appreciation
relative to most currencies.
- The European Central Bank (ECB)
implemented aggressive policies, taking
rates negative and introducing the
targeted longer-term refinancing
operation (TLTRO) in an effort to inject
additional credit into Europe. The
objective is to ultimately stimulate loan
growth in hopes of restarting a generally
moribund economy while preventing
- The belief that Europe continues on the
path to recovery faded as the quarter
progressed as economic numbers out of
Italy and France were poor,
accompanied by signs of weakness from
- The U.S. economy rebounded in the
second quarter after a slower-thanexpected
start to the year and continued
its momentum through the third quarter.
The U.S. Federal Reserve (Fed) is exiting
quantitative easing and looks to raising
rates by next summer.
- Asia has been impacted by continued
concerns regarding a slowdown in
Chinese GDP (Gross Domestic Product)
and its impact on various industries
across the globe.
- The Fund posted negative performance
but outperformed (before the effects of
sales charges) relative to the benchmark.
Solid stock selection, particularly in
materials, consumer staples and
financials benefitted performance and
more than offset poor stock picking in
energy and telecommunications. The
Fund’s sector allocation hurt
performance. An underweight allocation
to health care, a top performing sector,
was a main detractor. U.S. dollar
currency hedges to select currencies
were the largest contributor to absolute
and relative performance.
- As the quarter progressed, we became
less confident of European economic
stabilization and Asian growth. Over the
quarter, the Fund increased its
allocation to consumer staples and
financials and reduced exposure to
consumer discretionary and health
- On a geographic basis, we added to
northern Europe and trimmed perceived
expensive, lower dividend-paying U.S.
health care and utilities holdings. We
continue to have an overweight
allocation to French stocks as we feel
investor sentiment will improve as
government reforms roll out over the
next 12 months.
- The Fund’s largest sector overweights
include consumer discretionary and
financials, where we continue to find
companies we believe provide good
dividend yield and growth prospects.
- We believe the U.S. is on a steady
economic growth path, with an
increase in confidence leading to
capital expenditure and hiring growth.
In Europe, consumer and investor
confidence has fallen due to Russian
intervention in Ukraine and Chinese
economic slowdown. We think global
economic growth is mixed and
therefore monetary policy is likely to
remain aggressive for the foreseeable
future, but to a lesser extent in the U.S.
- Italy and France are currently
implementing governmental and
private sector reforms in an effort to
competitively position their economies
on a global scale. However, they are
missing their government deficit
targets, which will likely lead to a
compromise with the European
commission – leading to firmer reform
- We believe China’s multi-year
rebalancing to a more consumerbased
economy as well as its
anticorruption efforts needs to be
monitored. In our view, these changes
will have lasting impacts throughout
the global marketplace in shaping
gross domestic product (GDP) growth,
commodity prices and multinational
- In our view, the strongest long-term
GDP growth will still occur in emerging
markets and the U.S. due to better
Effective August 4, 2014, Robert Nightingale became the sole portfolio manager of the Ivy Global Equity Income Fund.
The opinions expressed in this commentary are those of the Fund’s managers and are current through Sept. 30, 2014. 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 share 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 fluctuations, political or economical
conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in high-income securities may carry a
greater risk of nonpayment of interest or principal than higher-rated bonds. Dividend-paying investments may not experience the same price appreciation as non-dividend paying instruments. Dividendpaying
companies may choose to not pay a dividend or the dividend may be less than expected. 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.