Market Sector Update
- The bond rally that drove yields lower
through the first quarter of the year
continued in the second quarter, with
yields continuing to decline after some
mixed economic signals from the first
- Within the high-yield sector, we have
seen stronger performance from the
credits than on the lower rated
securities. This is a reversal from what
we saw last year.
- 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.
- With the Federal Reserve indicating it
plans to complete the tapering of its
stimulus program known as
quantitative easing (QE), fixed income
markets are heading into a period
where one of the key questions will be
when and how quickly will rates rise and
if a rate move will be sustained.
- The markets are heavily reliant on the
economic data. It is our view that if the
data signals a robust economy, then
the markets will begin to move interest
rates before Fed policymakers
implement a rate hike.
- However, we continue to believe the
most likely course for interest rates is a
gradual rise and not an abrupt and
- We believe high-yield can still perform
well in a rising rate environment
compared with other fixed income
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. The price of the Fund’s shares will fluctuate with market conditions and other factors. Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and
are not federally insured by the Federal Deposit Insurance Corporation. Closed-end funds frequently trade at a discount from their net asset values (NAVs), which may increase an investor’s risk of loss.
At the time of sale, shares may have a market price that is below NAV, and may be worth less than the original investment. There is no assurance that the Fund will meet its investment objective.
An investment in the Fund is not appropriate for all investors and is not intended to be a complete investment program. The Fund is designed as a long-term investment and not as a trading vehicle.
Ivy Investment Management Company (IICO) serves as the Fund’s investment adviser. IICO is a wholly-owned subsidiary of Waddell & Reed Financial, Inc.
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.