Chief Causes for the Ivy Global Growth Fund’s Poor Showing in YTD 2016



Performance evaluation of the Ivy Global Growth Fund

The Ivy Global Growth Fund – Class A (IVINX) figures among the bottom two funds in its peer group of 12 for YTD 2016. Except for the one-year period in which it stands fourth, the fund has been a below-average performer.

We have graphed IVINX’s performance against two ETFs: the iShares MSCI ACWI Ex-US ETF (ACWX) and the Vanguard FTSE All-World Ex-US ETF (VEU).

Let’s look at what has contributed to the fund’s poor performance in YTD 2016.

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Portfolio composition and contribution to returns

Consumer discretionary stocks have caused the most damage to IVINX in YTD 2016. China’s (JD) is head and shoulders above any other stock from the sector in terms of negative contribution. Carnival (CCL) and L Brands (LB) have also contributed sizably. Amazon (AMZN) has reduced some of the negative contribution, but the amount of this stock is very low.

Healthcare is another major negative contributor. Leading detractors from the sector are Teva Pharmaceutical Industries (TEVA), Allergan (AGN), and Biogen (BIIB). HCA Holdings (HCA) has saved further losses to the sector.

Meanwhile, financials have contributed negatively due to Intesa Sanpaolo (IITSF), Prudential (PUK), and Signature Bank (SBNY). Positive contribution from JB Hunt Transport Services (JBHT) from the industrials sector was overshadowed by Airbus Group (EADSY) and CAR.

On the positive end of the spectrum are consumer staples, led by Coca-Cola (KO) and India’s ITC Limited. Meanwhile, Halliburton (HAL) has powered the energy sector ahead.

Investor takeaway

IVINX is different from most other funds in this review due to its high exposure to US stocks. It is suitable for those investors who want global equities exposure with a focus on US stocks. For investors who already have enough exposure to US stocks or want exclusive exposure to global stocks, this fund is not suitable.

Its performance has been quite poor in 2016 so far and it has far underperformed the passively managed ACWX. Investors should be cautious about investing in this fund and look at its long-term performance to see whether the fund has done better over longer periods.

Let’s now move on to the MFS International Growth Fund – Class A (MGRAX).


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