Ivy Global Growth

Ivy Global Growth Fund

Market Sector Update

  • The fourth quarter was another strong quarter for the global equity market. Equities outperformed most asset classes, with growth outperforming value in the period on continued confidence in global economic growth. The market broadly performed well across regions and investment styles. Japan outperformed most developed markets on some early signs of much needed inflation driven by a tight labor market. Emerging markets outperformed developed markets with China, the rest of Asia and Africa doing particularly well in the quarter.
  • On a sector basis, the market’s trend of underperformance in defensive sectors continued. Utilities, telecommunications and healthcare all underperformed. Information technology was a continued strong performer in the period, followed closely by materials and consumer discretionary.

Portfolio Strategy

  • The Fund posted a positive return but underperformed the benchmark. Underperformance was primarily driven by poor stock selection in healthcare. Individual detractors included Celgene Corp., Alexion Pharmaceuticals and Actavis Plc. The Fund’s overweight allocation and strong stock selection in information technology was a positive contributor to performance as well as strong stock selection in financials. Top Individual contributors to performance included Ping An Insurance Group, Amazon.com Inc. and Microsoft Corp.
  • We continue to maintain the Fund’s overweight to Europe (specifically France) as well as to emerging markets, primarily in China and India financials. The Fund’s overweight to Europe stems from the region’s positive growth and encouraging market reforms (particularly in France).
  • We believe growth in China is unlikely to accelerate further, but valuations in some parts of the market still look attractive. As such, we have found select opportunities with perceived strong growth at reasonable prices.
  • We are underweight the U.S., but continue to find examples of great businesses with strong competitive advantages. Given the recent market strength, we are focused on valuation and trimming some positions where valuations may have gotten stretched.


  • We believe one of the major drivers effecting markets going forward will be the debate around where we are in the global monetary tightening cycle. The balance sheets of most G7 nations (U.S., Japan, Germany, the U.K., France, Italy and Canada) have expanded, though the U.S. Federal Reserve (Fed) stopped its expansionary monetary policy in November of 2014. As the U.S. Fed raises rates, other governments around the world are considering forms of monetary tightening, including balance sheet reductions and rate increases. Given the amount of liquidity governments provided following the financial crisis, the gradual unwinding creates uncertainty in the market.
  • In the U.S., the hope is that the recent tax cut could help fuel a renewed capital expenditure cycle, which might extend an already mature U.S. economic cycle.
  • In our view, the current pace of market appreciation is not sustainable, as a number of risks to equity markets exist that are not fully reflected in the current market environment. Europe has to manage through the process of Britain’s exit from the European Union, which will likely cause some market uncertainty. Geopolitical tensions, particularly with North Korea, are heightening and often unpredictable and a general trend in nationalism is a risk for capital markets.

The opinions expressed are those of the Fund’s manager 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, 2017, 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.

Top 10 holdings as a percent of net assets include: MasterCard, Inc., Class A 4.8%, Airbus SE 4.3%, Microsoft Corp. 4.1%, Amazon.com, Inc. 3.6%, Visa, Inc., Class A 3.5%, Ping An Insurance (Group) Co. of China Ltd., H Shares 3.4%, The Home Depot, Inc. 3.4%, Facebook, Inc., Class A 3.1%, Alibaba Group Holding Ltd. ADR 3.0% and Prudential plc 2.8%.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. 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. 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.