Ivy Global Growth

Ivy Global Growth Fund
09.30.17

Market Sector Update

  • The global equity market continued its upward trend in the quarter, posting a return near 5%. Stocks outperformed most assets classes, including gold, cash as well as most government and corporate bonds.
  • Both value and growth did well in the quarter, with growth stocks modestly outperforming value. General investor sentiment and economic outlook remained positive, driving outperformance of riskier assets as defensive sectors underperformed. While most regions around the world had positive returns, developed markets, including the U.S., underperformed most emerging markets with Latin American and China posting particularly strong gains.
  • With the exception of consumer staples, all sectors posted positive absolute returns in the period, with energy, materials and information technology as standout performers. On the other hand, consumer staples, utilities, real estate and healthcare underperformed.

Portfolio Strategy

  • The Fund outperformed the benchmark (before the effects of sales charges), with an overweight allocation and strong stock selection in the information technology sector driving relative outperformance. The Fund’s position in Alibaba Group Holding Ltd. ADR (3.4% of Fund net assets) was the top contributor to performance for the period, followed by MasterCard, Inc., Class A (4.5% of Fund net assets).
  • Stock selection in industrials and financials were also modest positive relative contributors to performance for the quarter, while selection in energy and consumer staples mildly detracted. Individual stocks that negatively contributed to performance in the period included ProSiebenSat. 1 Media SE and HCA Holdings, Inc. (1.3% and 2.0% of Fund net assets, respectively).
  • While we have reduced some exposure in the cyclically sensitive semiconductor space, the Fund continues to have a significant overweight to information technology stocks. In our view, the sector has long-term, positive secular tailwinds. Additionally, we have increased exposure to financials stocks outside the U.S., primarily in regions with perceived strong growth driven by low penetration rates of banking and insurance that continues to improve.

Outlook

  • We expect a continuation of the recent environment of modestly improving economic growth from most developed markets, including the U.S. and Europe. On the U.S. front, while economic data remains solid, uncertainty around the legislative success of tax reform and the potential impact to corporate earnings has the ability to materially impact equity markets in the coming months.
  • Europe continues to show improvement, particularly in manufacturing data where France and Germany have shown strength. One of the bigger risks to global equity markets at this time appears to be geopolitical tensions that seem to be heightened and are often unpredictable. Thus far, the market seems to be taking risks in stride.
  • While we continue to believe the environment is positive for global equities, we have been looking for opportunities to trim more cyclical names on strength. 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.

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 Sept. 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.

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.