Ivy Lasalle Global Real Estate Fund

09.30.19

Market Sector Update

  • Global real estate securities produced positive absolute returns in the third quarter. The real estate sector benefitted from stable operating fundamentals, as well as the persistence of a risk-off investment environment.
  • While equities fluctuated between gains and losses for most of the period, global real estate securities made gains each month of the quarter. The sector’s durable cash streams and attractive dividend yields appealed to investors as concerns regarding economic growth, trade and political risk increased.
  • Risk assets have produced strong returns year-to-date as financial conditions have eased for much of the year. Real estate securities have gained more than 20% in 2019, outperforming both global bond and equity indices.

Portfolio Strategy

  • The Fund delivered a positive return for the quarter, but underperformed its benchmark.
  • On a relative basis, the Fund’s performance was impacted by negative contributions from regional allocation and stock selection. Regional allocation results were impacted by an overweight position to Hong Kong, which significantly underperformed the broader real estate index as political unrest intensified in the region. This unrest weighed on Hong Kong’s near-term economic outlook, impacting investor and business sentiment in the region.
  • Stock selection within Hong Kong also detracted from relative performance, as well as the U.S. where results were impacted by underweight positions to several more defensive property types. These include health care, manufactured homes, data centers and triple-net lease properties, which benefitted from the quarter’s risk-off investment environment.
  • The Fund’s country allocations were adjusted during the period. We transitioned our position to continental Europe from underweight to a market weight position. This shift was supported by a reduction in the Fund’s overweight position to Japan, and an increase in its underweight position to Australia. We retained several positions, including overweights to the United Kingdom and Hong Kong. We also maintained underweight positions to Singapore, Canada

Outlook

  • Ongoing economic softening, coupled with lingering trade and political tensions, has weighed on the global outlook in 2019. However, lowered growth expectations may be offset by easing financial conditions. Interest rates of all type, including the real estate sector’s all-important real long-term corporate rates, have been compressed and supported by fiscal and monetary stimulus.
  • Real estate operating fundamentals remain solid across much of the world based on positive commentary from management teams in the most recent reporting periods and sector-related conferences.
  • Global real estate securities continue to be supported by sluggish, yet positive economic conditions and a sector environment highlighted by stable operations and attractive pricing fundamentals.

The opinions expressed are those of the Fund’s managers 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, 2019, 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.

All information is based on Class I shares.

On Nov. 5, 2018, the Ivy LaSalle Global Risk-Managed Real Estate Fund merged into the Ivy LaSalle Global Real Estate Fund.

Risk factors: The value of the Fund's shares will change, and you could lose money on your investment. 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. Because the Fund invests more than 25% of its total assets in the real estate industry, the Fund may be more susceptible to a single economic, regulatory, or technical occurrence than a fund that does not concentrate its investments in this industry. 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 Fund is non-diversified, meaning that it may invest a significant portion of its total assets in a limited number of issuers, and a decline in value of those investments would cause the Fund's overall value to decline greater than that of a more diversified portfolio. 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.