Ivy Global Growth

Ivy Global Growth Fund
06.30.17

Market Sector Update

  • Global equity markets moved higher during quarter, returning slightly more than 4%. Growth stocks outperformed value stocks during the period and emerging markets outperformed developed markets, as investors’ increased appetite for risk continued into the second quarter. European markets and Japan both outperformed the U.S. during the period. China led the emerging-market outperformance.
  • The healthcare, industrials, financials and information technology sectors all outperformed in the period. Energy was a notable laggard, continuing the negative trend from the first quarter as commodity prices remained weak.

Portfolio Strategy

  • The Fund performed in line with the benchmark (before the effects of sales charges) during the period. Stock selection in information technology was the top relative contributor to performance for the period. Exposure to internet holdings outside the U.S. including Alibaba Group Holding Ltd. ADR, Tencent Holdings Ltd. and Mercadolibre Inc. were material drivers to performance. Additional positives included Airbus Se, Smith & Nephew plc and Mastercard Inc.
  • Performance was offset by the Fund’s overweight allocation to the poor performing energy sector as well as weak stock selection in industrials and consumer discretionary.
  • After making a number of portfolio changes in the wake of the U.S. Presidential election last year, adjustments to portfolio construction have been more limited recently. The Fund’s financials exposure has remained relatively stable for most of the year (remains an underweight allocation), but less so than prior to the November election. Our largest overweight is to the information technology sector, where we continue to see attractive relative valuations and a promising growth outlook for the sector.

Outlook

  • We anticipate modest improving economic growth from Europe and the U.S., and stable growth from Japan. While our global economic outlook is positive, a number of risks to equity markets exist that may not be 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.
  • While the U.S. Presidential election had an initial positive impact on equity risk appetite, President Trump’s ability to deliver on economic promises has been challenging thus far.
  • Despite uncertainties in the market, we believe our portfolio of strong global growers with sustainable competitive advantages and unique products that serve large end markets can drive shareholder value over time.
  • We continue to search for and make investments one company at a time, seeking to benefit clients over the long run.

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 June 30, 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 Equity Holdings as a percent of net assets as of 06/30/2017: MasterCard, Inc., Class A 3.9%, Airbus SE 3.6%, Facebook, Inc. Class A 3.5%, Koninklijke Philips Electronics N.V. 3.5%, Alibaba Group Holding Ltd. ADR 3.3%, Halliburton Co. 3.3%, Amazon.com, Inc. 3.2%, Amazon.com, Inc. 3.2%, Philip Morris International, Inc. 3.1%, Visa, Inc., Class A 2.9% and The Home Depot Inc. 2.8%

Class R6 shares were renamed Class N on March 3, 2017.

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.