Ivy Value Fund


Market Sector Update

  • The long-awaited “rotation” from growth stocks to value stocks made an appearance in the first quarter of 2021. The Russell 1000 Value Index (the Fund’s benchmark) returned 11.26% while the Russell 1000 Growth Index returned 0.94%. While the outperformance in the quarter was significant, growth has outperformed value for much of the past decade. In summary, there is a lot of catching up to do.
  • The U.S. economy continued its recovery from the COVID-19 pandemic during the first quarter of 2021, and the stock market followed with positive returns. There were many bright spots, including employment, which increased by 1.6 million in first quarter, more than recovering the fourth quarter layoffs related to the virus surge. As of March 2021, 62% of the 22 million jobs lost during the first couple months of the pandemic have been recovered.
  • A $1.9 trillion stimulus bill was passed in March 2021, which included $1,400 checks and a continuation of the $300 per week supplemental unemployment benefit. President Biden presented his infrastructure plan for total spending of $2.25 trillion to be spent over 8 years. The plan also included tax increases over a 15-year period to pay for the cost. The Federal Reserve (Fed) maintained a dovish message and continued to downplay inflation fears and taper talk. Housing demand remained strong despite gains in both home price and mortgage rates. Manufacturing activity strengthened with the ISM Index hitting a 37-year high. The combination of elevated orders and low inventories is expected to support ongoing production in the coming months.
  • As always, there are potential negatives that bear watching. Interest rates continue to rise, as inflation seems about to re-appear. Fed policy is still supportive but cannot last forever. There is also a chance for further stimulus; however, it is not certain.

Portfolio Strategy

  • The Fund outperformed its benchmark for the quarter. Our best performing sectors on a relative basis were health care and consumer discretionary. Sectors that dragged on performance included communication services and materials. Performance was driven primarily by stock selection as the Fund’s approach is to keep sector overweight and underweight positions close to the benchmark’s weightings in an effort to minimize any macro risks that come with individual sectors.
  • The sharp economic recovery was a benefit to oversold cyclical sectors. Oil rebounded to start the year, which benefited our investments in Marathon Petroleum Corp. and EOG Resources, Inc. Within financials, Capital One added to the Fund’s outperformance as consumers remained resilient and posted strong card data. Other positive names included NXP Semiconductors NV, Magna International, Inc. and nVent Electric plc.
  • Our investments in other areas lagged in the rebound. Walmart, Inc. was the greatest individual detractor as investors rotated away from many of the “stay-at-home” stocks. GlaxoSmithKline plc was another holding that dragged on performance. Not owning Exxon, which is a very large weight in the benchmark, was another detractor.
  • Our strategy does not attempt to make sector calls, rather focusing primarily on stock selection. We attempt to equal weight sectors to remove macro factors from the portfolio and let individual stock selection drive performance. We strive to be no more than 1% over or under weight any sector. Most sector weighting changes occur due to the movements of the stocks held within that sector.


  • The U.S. economy grinded to an abrupt halt in March 2020, but not for an economic reason. The pandemic recession, while devastating, was relatively short lived due to government paycheck protection and targeted stimulus. The stock market rebounded to new highs earlier this year in anticipation of an economic recovery. Despite supply chain issues across the board, initial indicators are signaling that there is a tremendous amount of pent-up demand.
  • While these economic forces are currently dominating the news, our first approach is from the company level. We seek to find quality, growing companies whose stocks are trading below what we consider their intrinsic values. This often is due to short-term negative factors, and we will become larger owners of a company if we feel those negatives are about to dissipate. We continue to search for and make investments one company at a time to seek 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 March 31, 2021, 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 % of net assets as of 03/31/2021: Comcast Corp. 3.9, Citigroup, Inc. 3.7, Philip Morris International, Inc. 3.3, Morgan Stanley 3.2, Capital One Financial Corp. 3.2, Walmart, Inc. 3.2, Welltower, Inc. 3.2, Target Corp. 3.1, Eaton Corp. Plc. 3.0 and Raytheon Technologies Corp. 3.0.

The Russell 1000 Value Index is an unmanaged index comprised of securities that represent the large cap sector of the stock market. It is not possible to invest directly in an index.

The impact of COVID-19, and other infectious illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty.

All information is based on Class I shares.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. The value of a security believed by the Fund’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. The Fund typically holds a limited number of stocks (generally 30 to 45) and the Fund's manager also tends to invest a significant portion of the Fund's total assets in a limited number of stocks. As a result, the appreciation or depreciation of any one security held by the Fund may have a greater impact on the Fund’s NAV than it would if the Fund invested in a larger number of securities or if the Fund's manager invested a greater portion of the Fund's total assets in a larger number of stocks. 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. Not all funds or fund classes may be offered at all broker/dealers. These and other risks are more fully described in the Fund’s prospectus.