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Our Company
Ivy Investments
We stand for a legacy of expertise, focused on delivering strong, long-term results. Our name reflects our progressive product offerings and growing global presence as we continue to adapt to the needs of investors.
Quarterly Commentary
Ivy Apollo Multi-Asset Income Fund
12.31.20
Market Sector Update
The global credit market renewed its grind tighter in the fourth quarter after pausing in September. The credit spread
on the Bloomberg Barclays U.S. Universal Index ended the quarter at 81 basis points (bps), which is 125 bps tighter
than the widest levels reached in March and just 8 bps wider than the year’s tights in January 2020.
The Organization for Economic Cooperation and Development (OECD) in December again upgraded its forecast for
global economic growth in 2020 to a decline of 4.2%, up from September’s estimate of negative 4.5%. China, with
growth expected at 1.8%, remains the only G20 country that the OECD forecasts to have grown in 2020. The OECD
does expect global growth to rebound in 2021 to 4.2%, although the rebound will be very uneven across the globe.
Fixed-income investment returns generally remained positive for the year, despite the U.S. Treasury yield rising
steadily over the fourth quarter to end the year at 0.91% after falling near 0.5% multiple times earlier in the year. The
U.S. Treasury curve steepened during the quarter as market-implied inflation metrics rose on optimism over an
economic recovery and the election of Joe Biden as the 46th president of the United States.
Growth in U.S. consumer spending slowed towards the end of the quarter as a new wave of COVID-19 cases swept
the country and Congress failed to pass further stimulus measures until the end of December.
Nearly all global real estate property sectors finished higher in the fourth quarter, with a clear risk-on trend. Strongest
returns came from the property sectors most directly exposed to COVID-19 containment efforts, such as the retail,
office and lodging sectors, as investors positioned for an economic recovery. Most of the secular growth or more
defensive sectors advanced but not as meaningfully.
Portfolio Strategy
The Fund outperformed its benchmark during the quarter. Most of the outperformance against the benchmark was
attributable to the Fund’s exposure to credit as monetary stimulus and expectations of a successful vaccine roll-out
supported market sentiment. Lower quality CCC credit outperformed higher quality credit over the quarter.
Roughly 50% of the Fund was allocated to equity at the end of the quarter. From a sector allocation perspective,
overweight positions in utilities and health care and underweight positioning in energy hurt relative performance.
Stock selection was most positive in information technology, financials and utilities, while selections in energy, health
care and consumer discretionary detracted from relative performance.
We continue to seek opportunities to reduce volatility in the Fund. Additionally, we are maintaining a low-duration
strategy as we feel it allows us a higher degree of certainty involving those companies in which we can invest. With
the compression on credit spreads to levels tighter than their historical averages, we are continuing to move to a more
defensive position by moving up in higher quality credit/companies at the expense of high-yield credits in emerging
market countries.
Outlook
We believe short-term interest rates will stay near zero for the foreseeable future. Inflation will also remain low due
to growth constraints, although it is likely to be higher than we had previously anticipated due to the Democrats
gaining control of the Senate along with the House of Representatives.
The U.S.’s sizable fiscal packages provided much needed income support for sidelined workers and financial support
for businesses facing interrupted product demand and cash flows. However, stimulus packages passed thus far are not fiscal stimulus that will generate sustained stronger growth. The federal government finally passed another fiscal
stimulus bill at the end of December, while states look to fill gaps in their budgets. The outlook is good for additional
stimulus as Democrats have stated it is one of their first priorities in the new term.
Demand for corporate credit remains intact. Across the globe, fixed-income yields are staggeringly low, leaving
investors few alternatives. The Fed has indicated it will continue to support markets beyond the point at which the
COVID-19 virus is contained, which we believe is likely to support current spread levels.
China has contained COVID-19 more effectively than most countries and is now the closest of the major countries to
operating at “business-as-usual.” This has been a major support to global resource demand. While Chinese authorities
are unlikely to tighten policy for the foreseeable future, momentum in its credit cycle is likely to have peaked which
could weigh on global resource demand later in 2021.
The economies of many emerging market countries have been supported by surprisingly aggressive fiscal stimulus.
With ballooning fiscal deficits, however, governments will likely have less room to respond as COVID-19 cases hit
record highs across much of the world.
West Texas Intermediate crude began to rise in mid-November as COVID-19 vaccine trials showed positive results.
The crude benchmark rose from $36 per barrel at the end of October to $48 per barrel at the end of the year. Saudi
Arabia has committed to cutting supply during the first quarter of 2021 which should provide further support for higher
oil prices as well as the finances of countries that depend on oil exports. Meanwhile, China’s economic strength
continues to support the prices of many industrial metals.
The tilt away from globalization that has been underway for about half of the decade is likely to be reinforced. We
believe new factors stemming from COVID-19 and heightened geopolitical tension between the U.S. and China will fuel
the move further away from globalization, which will change complex international supply chains, and lead to higher
tariffs and potentially increased barriers to immigration.
Global real estate securities have not fully participated in the equity market recovery. We believe they are attractively
priced relative to historical relationship with government and corporate bonds. We think attractive valuations, coupled
with highly supportive financial conditions, positions the sector to deliver attractive investment returns as the economy
continues to strengthen.
The opinions expressed are those of the Fund’s managers and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through Dec.
31, 2020, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not
intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial
needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.
The Bloomberg Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-
ERISA portion of the CMBS Index. Municipal debt, private placements, and non-dollar-denominated issues are excluded from the Universal Index. The only constituent of the index that includes floating-rate debt is
the Emerging Markets Index. Source: Bloomberg Barclays. It is not possible to invest directly in an index.
The Fund is managed by Ivy Investment Management Company. The total return strategy is sub-advised by Apollo Credit Management, LLC and the global real estate strategy is sub-advised by LaSalle Investment
Management Securities, LLC.
All information is based on Class I shares.
The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets
in ways that cannot necessarily be foreseen. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.
Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. Although asset allocation among different sleeves and asset categories generally tends to limit risk and
exposure to any one sleeve, the risk remains that the allocation of assets may skew toward a sleeve that performs poorly relative to the Fund's other sleeves, or to the market as a whole, which would result in the
Fund performing poorly. While Ivy Investment Management Company (IICO) monitors the investments of Apollo Credit Management (Apollo) in addition to the overall management of the Fund, including rebalancing
the Fund's target allocations, IICO and Apollo make investment decisions for their investment sleeves independently from one another. It is possible that the investment styles used by IICO or Apollo will not always
complement each other, which could adversely affect the performance of the Fund. As a result, the Fund's aggregate exposure to a particular industry or group of industries, or to a single issuer, could unintentionally
be larger or smaller than intended. Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and
differences in real estate market values. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting
standards and foreign regulations. These risks are magnified in emerging markets. 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 below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Loans (including loan assignments, loan participations and other loan instruments)
carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loans 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.
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Ivy offers model delivery for nine equity strategies
Nine strategies are available in a model-delivery format, to be available in SMA and UMA accounts, providing advisors and investors a new way to access Ivy’s strategies.
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A flexible, tax-advantaged 529 plan that allows you to invest for future education goals.
Invest in the future: Health care in emerging markets
Investors commonly see emerging markets as an asset class that requires market timing. That it comes in and out of fashion like turtlenecks and corduroys – just a short-term fad. However, don’t look for reasons this latest investment trend will soon end up in the donation pile.
Ride the cycle
The global economy stands at the dawn of a new business cycle. We outline what it could mean for investors.
Perfect Timing
March payrolls beat consensus estimates by 256,000, the largest one month increase since August. High-frequency data suggests gains in April and May could be greater than 1,000,000.
National Healthcare Directives
Discover how Five Wishes can strengthen client relationships.
10 ways to explain saving and finance to Millennials and Generation Z
How do you discuss finances with phone-obsessed generations? It helps by teaching them how they like to learn. Discover 10 ways to explain saving and finance to Millennials and Generation Edge.
Three plans every Gen Xer needs to consider before they turn 50
Xers - hitting the big 5-0 is a big milestone. Uncover the three essential plans you may want to consider to protect your family and yourself.
Ivy Investments
We stand for a legacy of expertise, focused on delivering strong, long-term results. Our name reflects our progressive product offerings and growing global presence as we continue to adapt to the needs of investors.
Quarterly Commentary
Ivy Apollo Multi-Asset Income Fund
Market Sector Update
Portfolio Strategy
Outlook
The opinions expressed are those of the Fund’s managers and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through Dec. 31, 2020, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor’s specific objectives, financial needs, risk tolerance and time horizon. Past performance is not a guarantee of future results.
The Bloomberg Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non- ERISA portion of the CMBS Index. Municipal debt, private placements, and non-dollar-denominated issues are excluded from the Universal Index. The only constituent of the index that includes floating-rate debt is the Emerging Markets Index. Source: Bloomberg Barclays. It is not possible to invest directly in an index.
The Fund is managed by Ivy Investment Management Company. The total return strategy is sub-advised by Apollo Credit Management, LLC and the global real estate strategy is sub-advised by LaSalle Investment Management Securities, LLC.
All information is based on Class I shares.
The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.
Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. Although asset allocation among different sleeves and asset categories generally tends to limit risk and exposure to any one sleeve, the risk remains that the allocation of assets may skew toward a sleeve that performs poorly relative to the Fund's other sleeves, or to the market as a whole, which would result in the Fund performing poorly. While Ivy Investment Management Company (IICO) monitors the investments of Apollo Credit Management (Apollo) in addition to the overall management of the Fund, including rebalancing the Fund's target allocations, IICO and Apollo make investment decisions for their investment sleeves independently from one another. It is possible that the investment styles used by IICO or Apollo will not always complement each other, which could adversely affect the performance of the Fund. As a result, the Fund's aggregate exposure to a particular industry or group of industries, or to a single issuer, could unintentionally be larger or smaller than intended. Investment risks associated with investing in real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. 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 below investment grade securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Loans (including loan assignments, loan participations and other loan instruments) carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loans 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.