Ivy Cundill Global Value Fund

Ivy Cundill Global Value Fund

Market Sector Update

  • Across the globe, markets fell after peaking in January. A lack of volatility was enjoyed during the rather smooth market run in 2017, though increased during the first quarter of 2018 partially stemming from trade war concerns. Conviction of continued solid global gross domestic product (GDP) growth remains; however, inflation concerns and a higher-than-expected U.S. Federal budget have added to concerns of a potential overheating economy.
  • There are a number of geopolitical threats, none more prevalent than the developing tariff proposals between the U.S. and China. Despite the recent rhetoric, we believe we will avoid an all-out trade war. Nonetheless, the market is a discounting mechanism, and the probability of damaging trade policies has increased.
  • Despite the volatility, the U.S. Federal Reserve (Fed) continued to hike interest rates with another 0.25% increase at the March meeting.

Portfolio Strategy

  • The Fund underperformed the benchmark for period, driven primarily by poor stock selection and currency effects. Poor stock selection in the financials, information technology and energy sectors were top relative detractors.
  • Top individual detractors to performance included Wells Fargo & Co., Citigroup, Inc. and RPC, Inc. (5.4%, 5.6% and 2.1% of Fund net assets, respectively).
  • On the other hand, the Fund's sector allocation aided performance, with a large relative underweight allocation to the poor-performing consumer staples sector the top contributor to performance.
  • At quarter end, the Fund had about 58% of equities in U.S. stocks, 37% in international stocks and the remainder of the Fund in cash and equivalents.


  • As the new fiscal year begins, we believe the dispersion between the performance of growth and value styles is at its highest level in years. We believe the macro environment of global growth, rising rates and creeping inflation are positives for value stocks. While rising interest rates and inflation could pressure equity multiples going forward, we believe healthy earnings should continue to support share values.
  • We also believe that our portfolio is uniquely positioned to benefit from rising rates and reflation due to our overweight allocation to bank stocks and other cyclically oriented holdings. In our view, we are in the latter stages of an equity secular bull market, and investors are assigning too high a probability to low probability tail risk regarding a recession.
  • As always, we continue to search the globe for stocks trading at a significant discount to their intrinsic value.

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 March 31, 2018, 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.

Risk factors: 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 fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. 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.