Ivy Asset Strategy Fund Shifts to China, India for Top Returns
By Sree Vidya Bhaktavatsalam and Carol Massar
Feb. 20 (Bloomberg) — Ivy Asset Strategy, the top-ranked
mutual fund that invests in stocks and bonds globally, bought
shares of China Mobile Ltd. and Reliance Industries Ltd. as it
almost doubled holdings in Hong Kong, India and Brazil.
The countries account for 27 percent of the $10.3 billion
funds assets, up from 15 percent six months ago and the most
since it opened in 1995, according to co-manager Ryan Caldwell.
Gold investments were cut in half from as much as 20 percent of
assets to finance purchases of emerging-market securities.
“Despite the volatility, we think the emerging economies
are the best place to be in terms of absolute returns,
Caldwell said yesterday in interview from his office at Waddell
Reed Financial Inc. in Overland Park, Kansas, which owns the
Ivy and Waddell Reed Advisors fund families.
Ivy Asset Strategy returned 36 percent in the past year,
the most among global allocation funds, according to data
compiled by Morningstar Inc. in Chicago. Caldwell and co-
managers Michael Avery and Daniel Vrabac also rank first in the
group for the past three- and five-year periods.
The fund, which carries Morningstars four-star rating, the
firms second-highest, held up better than the peer average as
subprime-mortgage losses triggered stock and bond selloffs
around the world. Its lost 1.2 percent this year, compared with
a decline of 4.8 percent for the group.
Investment guidelines allow the managers “to vary their
allocations quite widely, and theyve taken advantage of that
freedom, Morningstar analyst Gregg Wolper wrote in a year-end
research note.
Hong Kong
Ivy Assets biggest holdings include China Mobile, the
worlds largest wireless-phone operator by subscribers. Beijing-
based China Mobile surged 55 percent in Hong Kong in the past
year as the company added customers after cutting calling rates.
Chinese companies that trade in Hong Kong account for 11 percent
of the funds assets.
The fund has 10 percent of assets in India, where economic
expansion ranks second after China among the worlds biggest
economies. The fund owns Mumbai-based Reliance Industries, owner
of the worlds third-biggest oil refinery. Reliance, led by
Indian billionaire Mukesh Ambani, has advanced 75 percent in the
past year on record profits.
In Brazil, which accounts for 6 percent of assets, the
managers have put money in Sao Paulo-based Bolsa de Mercadorias
Futuros-BMF SA, Latin Americas largest derivatives market.
BMF has declined 14 percent since going public in November as
analysts said its shares were expensive compared with peers.
Brazil
The fund also owns shares of Rio de Janeiro-based Cia. Vale
do Rio Doce, the worlds largest iron-ore producer, which has
gained 53 percent in the past year, driven by record iron ore
prices.
“We like Brazil because “one, GDP growth has been very
good, and, at the same time, they have been doing a pretty good
job of bringing inflation down, Caldwell, 32, said in a
separate interview yesterday with Bloomberg Television.
Caldwell has been a manager with the fund for the past
year. Avery, 54, and Vrabac, 53, have managed the fund for the
past 10 years. The fund has a one-year Sharpe ratio of 2.35
compared with -0.58 for peers, according to Bloomberg data. A
higher Sharpe ratio means better risk-adjusted returns.
The Ivy Asset fund has 65 percent of its assets in stocks
and 10 percent in bonds. The rest is in cash and gold.
The managers of the Ivy Asset Fund shifted money to gold in
the past 18 months as the U.S. dollar fell compared with other
currencies and as the global stock markets tumbled on concerns
that the U.S. was headed into a recession. Gold prices have
surged 40 percent in the past year to about $928 an ounce, after
reaching a record $942.20 an ounce on Jan. 30.
Last Updated: February 20, 2008 12:54 EST
Tags: absolute return, assets, billionaire, chinese companies, decline, Investment Guide, recession, star analyst, stocks and bonds, strategy fund, ubs, volatility