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1.22.21
2021 Global Outlook
Ivy Investments believes the path forward requires a disciplined approach that combines resilience and a reliance on the fundamentals of active investing.
CIO Insights / 2.05.20
The beginning of a new cycle
We assess the current environment and offer 2021 market observations and the possible implications for investors.
11.18.20
Ivy Investments Forum
We recently gathered a number of thought-provoking experts who shared their latest views on an array of critical issues impacting today’s investing landscape. Watch the session replays to get our panelists’ insights.
Webcasts / 02.05.21
The Pandemic Time Capsule
How Covid-19 Impacts Every Generation and What This Means for a Plan Forward
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Passing on life lessons from generation to generation is important, especially when it comes to topics like money. Discover strategies to raising financially smart kids.
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Three plans every Gen Xer needs to consider before they turn 50
Xers - hitting the big 5-0 is a big milestone. Uncover the three essential plans you may want to consider to protect your family and yourself.
Our Company
Ivy Investments
We stand for a legacy of expertise, focused on delivering strong, long-term results. Our name reflects our progressive product offerings and growing global presence as we continue to adapt to the needs of investors.
Quarterly Commentary
Ivy Micro Cap Growth Fund
06.30.18
Market Sector Update
Smaller companies added to first quarter gains over the past three months, and also outperformed their large-cap
peers, based on broad market indices.
Small-cap company outperformance has now occurred in each of the past four months, which in and of itself is not
that significant; however, the magnitude is. Over this four-month period small caps, based on the Russell 2000 Growth
Index are outperforming large caps, based on the S&P 500 Index, by the largest margin since 2010. This performance
differential is almost certainly a result of increasing rhetoric about tariffs and fears of a global trade war erupting. On
the surface, it would appear a trade war would be less of an impact for smaller companies as they commonly generate
a lower percentage of revenue and earnings from overseas compared to large caps.
Portfolio Strategy
In the quarter ended June 30, 2018, the Fund outperformed its benchmarks, the Russell Microcap Growth Index and
Russell 2000 Growth Index, based on Class I shares.
In the second quarter, every sector but one posted positive returns in the Russell Microcap Growth Index, which is
indicative of the broad-based strength. In what has been a reoccurring theme in the recent past, the index continued
to be fueled by its two largest sectors – healthcare and technology. Broadly speaking, these sectors benefited from a
powerful combination of strong financial results, innovative new products, as well as multiple expansion.
The industrials and consumer discretionary sectors also produced solid gains for the index in the quarter. In the past,
companies in these two sectors commonly paid some of the highest tax rates; thus, the passage of tax reform has
enabled them to generate significant year-over-year growth in after tax cash flow and earnings. Lastly, as previously
mentioned, there was no real drag on the index’s performance. Materials was the worst performing sector and it was
down only slightly during the period.
Portfolio performance attribution analysis for the quarter reveals that the Fund benefited from both allocation effect
and stock selection. From an allocation standpoint, performance was aided by the technology sector since the Fund
carries an overweight position, and it was one of the strongest performing areas in the index. Additionally, the Fund’s
underweight position in financials also helped given this area of the market underperformed during the period.
Stock selection provided an outsized benefit during the second quarter due primarily to the Fund’s health care
holdings. Despite being underweight the sector, the Fund’s holdings appreciated meaningfully more than the index’s,
which resulted in significant outperformance in the second quarter. Technology holdings also added to the selection
benefit. On the negative side, stock selection in the energy sector created a modest headwind.
Companies that had the biggest positive impact on performance in the quarter included Tabula Rasa Healthcare,
Tactile Systems Technology and Axogen. Each of these companies have unique, innovative products that provide them
with strong competitive positions in very large, underpenetrated end markets. In terms of performance detractors, the
Fund benefited from having very few holdings that performed poorly. GTT Communications and Mercury Computer
Systems were the only two laggards in the quarter. In both instances this weakness came after posting sizable gains
over the past 18-24 months.
Outlook
Looking forward, as we enter the second half of the year, it appears that business fundamentals remain favorable
and the prospect for robust earnings growth is still intact. However, as valuation multiples continue to march higher,
especially for smaller healthcare and technology companies, it would increasingly appear that the marketplace
recognizes this forecasted growth. After posting strong absolute and relative returns in the quarter, we have trimmed
some of our stronger performers, which is providing us fresh capital to seek out new investments. While it is anyone’s
guess which direction the market is headed in the short term, we remain ready to capitalize on any pullback that could
occur due to something such as the escalating global trade conflict.
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, 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.
Top 10 holdings (%) as of 06/30/2018: 8x8, Inc. 5.3, Aerie Pharmaceuticals 5.2, Tabula Rosa HealthCare, Inc. 4.9, Mimecast Ltd. 4.9, Tactile Systems Technology, Inc. 4.7, AxoGen, Inc. 4.0, MYR Group, Inc. 3.2, Kornit
Digital Ltd. 3.1, EVO Payments, Inc. 3.1 and Cornerstone OnDemand, Inc. 2.8.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. The Russell Microcap Growth Index measures the performance of the micro-cap growth
segment of the U.S. equity market. The S&P 500 Index is an unmanaged index of common stocks. It is not possible to invest directly in an index.
Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. Market risk for small-sized companies may be greater than that for medium or large companies. Smaller
companies are more likely to have limited financial resources and inexperienced management. Stocks of smaller companies, as well as stocks of companies with high-growth expectations reflected in their stock
price, may experience volatile trading and price fluctuations. Furthermore, when the economy enters a recession, there tends to be a “flight to quality,” which may exacerbate the increased risk and greater price
volatility normally associated with smaller companies. The Fund’s performance may be more susceptible to a single economic, regulatory, or technological occurrence than if it had a more diversified investment
portfolio. The Fund may invest in Initial Public Offerings (IPOs), which can have a significant positive impact on the Fund’s performance that may not be sustainable. 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. 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.
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Ivy offers model delivery for nine equity strategies
Nine strategies are available in a model-delivery format, to be available in SMA and UMA accounts, providing advisors and investors a new way to access Ivy’s strategies.
Ivy InvestEdSM 529 Plan
A flexible, tax-advantaged 529 plan that allows you to invest for future education goals.
2021 Global Outlook
Ivy Investments believes the path forward requires a disciplined approach that combines resilience and a reliance on the fundamentals of active investing.
The beginning of a new cycle
We assess the current environment and offer 2021 market observations and the possible implications for investors.
Ivy Investments Forum
We recently gathered a number of thought-provoking experts who shared their latest views on an array of critical issues impacting today’s investing landscape. Watch the session replays to get our panelists’ insights.
The Pandemic Time Capsule
How Covid-19 Impacts Every Generation and What This Means for a Plan Forward
Raising financially smart kids
Passing on life lessons from generation to generation is important, especially when it comes to topics like money. Discover strategies to raising financially smart kids.
Three plans every Gen Xer needs to consider before they turn 50
Xers - hitting the big 5-0 is a big milestone. Uncover the three essential plans you may want to consider to protect your family and yourself.
Ivy Investments
We stand for a legacy of expertise, focused on delivering strong, long-term results. Our name reflects our progressive product offerings and growing global presence as we continue to adapt to the needs of investors.
Quarterly Commentary
Ivy Micro Cap Growth Fund
Market Sector Update
Portfolio Strategy
Outlook
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, 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.
Top 10 holdings (%) as of 06/30/2018: 8x8, Inc. 5.3, Aerie Pharmaceuticals 5.2, Tabula Rosa HealthCare, Inc. 4.9, Mimecast Ltd. 4.9, Tactile Systems Technology, Inc. 4.7, AxoGen, Inc. 4.0, MYR Group, Inc. 3.2, Kornit Digital Ltd. 3.1, EVO Payments, Inc. 3.1 and Cornerstone OnDemand, Inc. 2.8.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. The Russell Microcap Growth Index measures the performance of the micro-cap growth segment of the U.S. equity market. The S&P 500 Index is an unmanaged index of common stocks. It is not possible to invest directly in an index.
Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. Market risk for small-sized companies may be greater than that for medium or large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. Stocks of smaller companies, as well as stocks of companies with high-growth expectations reflected in their stock price, may experience volatile trading and price fluctuations. Furthermore, when the economy enters a recession, there tends to be a “flight to quality,” which may exacerbate the increased risk and greater price volatility normally associated with smaller companies. The Fund’s performance may be more susceptible to a single economic, regulatory, or technological occurrence than if it had a more diversified investment portfolio. The Fund may invest in Initial Public Offerings (IPOs), which can have a significant positive impact on the Fund’s performance that may not be sustainable. 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. 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.