Ivy Wilshire Global Allocation Fund

Ivy Wilshire Global Allocation Fund

Market Sector Update

  • The U.S. stock market, represented by the Wilshire 5000 Total Market Index, was up 21.94% for the second quarter of 2020. Although rebounding strongly, equities are still down for the year -3.30%. Although parts of the country have begun to loosen COVID-19 restrictions, considerable uncertainty about 2020 economic growth prospects remain. In fact, more than a dozen states have paused or reversed their reopening plans. According to a report by the Federal Reserve Bank of Philadelphia, expectations for real gross domestic product (GDP) growth this year are approximately -5%, with an unemployment rate remaining above 10%.
  • All eleven major sectors were in positive territory while the best performing sector was consumer discretionary (+37.0%), followed closely by energy (+32.6%) and information technology (+31.6%). Small-capitalization stocks outperformed large caps, and growth stocks continued to outperform value during the period and have outperformed during the past 12 months.
  • Equity markets outside of the U.S. also enjoyed a strong rebound during the quarter, although they did trail the U.S. market. Economic releases showed that the U.K. suffered its worst contraction in more than 40 years as real GDP shrank -2.2% in the first quarter. Employment data shows that nearly a third of the U.K.’s workforce is on furlough with the government supporting a majority of those employees’ wages. Although the eurozone is expected to shrink more than -8% this year, there are early signs of a recovery. Survey data shows that economic sentiment is returning, although is depressed versus earlier this year. Inflation statistics in Germany indicate that service providers have been able to successfully raise prices to counter COVID-19 restrictions. China’s economic recovery continued during the second quarter due, in part, to government support policies and the reopening of some overseas markets.
  • The U.S. Treasury yield curve was little changed during the quarter after a dramatic drop in the first quarter. Although the entire curve is below 1.50%, it also is steeper than it has been in two years. The 10-year Treasury yield ended the quarter at 0.66%, down just 4 basis points from March. The Federal Reserve (Fed) held steady on the federal funds rate, with no change to the overnight rate, which they expect will be near zero until at least 2022. Fed Chair Jerome Powell attempted to temper expectations by stating that, “The path forward for the economy is extraordinarily uncertain.” Credit spreads tightened significantly during the quarter, as evidenced by the double-digit return within the high yield market.

Portfolio Strategy

  • The Fund had a positive return and outperformed its blended benchmark for the quarter. Ivy International Core Equity Fund was the largest underlying fund allocation at about 13.3%, followed by Ivy Securian Core Bond Fund at 10.2%.
  • Global equity markets rallied throughout the second quarter as beaten-down risk assets regained their footing and massive fiscal and monetary stimulus was injected into the economy. Virtually every major asset class rallied during the period, such as high-quality U.S. fixed income, which had also performed well during the market selloff. The U.S. dollar weakened during the quarter, which boosted the results of un-hedged foreign equity and fixed income investments.
  • The Fund ended the quarter with about 35% allocated to fixed-income products, about 34% allocated to domestic equity products, about 30% allocated to foreign equity and global real estate products and 0.4% allocated to private placement investments.
  • The three largest contributors to performance in the quarter were the allocations to Ivy International Core Equity Fund, Ivy Emerging Markets Equity Fund and Ivy Large Cap Growth Fund. Ivy Mid Cap Growth Fund was the underlying allocation with the strongest absolute performance during the quarter. Outside of the small cash allocation, Ivy Government Securities Fund recorded the worst stand-alone performance for the quarter. No underlying funds generated a negative return during the quarter.
  • The Fund’s largest position, Ivy International Core Equity Fund, was a material contributor from returns. Overall, exposure to equity and real estate funds represent the key detractors to performance.


  • The Fund’s allowable allocation ranges are wide, but we anticipate equity-oriented investments will range from 55- 75% and fixed income-oriented investments will range from 25-45% during most market environments. The Fund’s long-term strategic target is a 65% allocation to global equities and 35% to global fixed income.
  • The dramatic selloff in risk assets created compelling investment opportunities during second quarter, but the speed of the market recovery, coupled with high levels of volatility and dispersion, has increased the importance of using actively managed strategies to navigate the investment environment.
  • COVID-19 infections continue to spread rapidly in several notable countries, while it is mostly under control in other large markets and life is beginning to return to normal in some regions. There is growing clarity regarding the outlook for economic growth and corporate earnings, but that improvement is like going from a dark room to one illuminated by a dim bulb.
  • We do not foresee interest rates rising dramatically in the near future. At some point the massive borrowing being done to combat COVID-19 and stimulate the economy may lead to sharp increases in the interest rate demanded for U.S. Treasuries, but we do not believe rates will rise materially in the coming months.

The opinions expressed are those of the Fund’s managers 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, 2020, 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.

Wilshire Associates sub-advises a portion of the Fund consisting of the multi-asset segment, which invests in affiliated mutual funds, and shall have no responsibility over any other assets or segments of the Fund.

The Wilshire 5000 Total Market Index is an unmanaged index that represents the total U.S. equity 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.

Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. The performance of the Fund will depend on the success of the allocations among the chosen underlying funds. 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. Fixed-income securities are subject to interest-rate risk and, as such, the net asset value of the Fund may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. Investing in small-capitalization stocks may carry more risk than investing in stocks of larger more well-established companies. Although larger companies tend to be less volatile than companies with smaller market capitalizations, returns on investments in securities of large-capitalization companies could trail the returns on investments in securities of smaller companies. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. Investing in the energy sector can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments, and the cost assumed by energy companies in complying with environmental safety regulations. Investing in commodities is generally considered speculative because of the significant potential for investment loss due to cyclical economic conditions, sudden political events, and adverse international monetary policies. 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. Investment risks associated with investing in science and technology securities, in addition to other risks, include: operating in rapidly changing fields, abrupt or erratic market movements, limited product lines, markets or financial resources, management that is dependent on a limited number of people, short product cycles, aggressive pricing of products and services, new market entrants and obsolescence of existing technology. 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.