End of a supercycle?

The effects of surging global debt

Chart is shown for illustrative purposes only.

Data: Bloomberg

In a world that is loaded with debt (and challenged to service that debt without the benefit of healthy economic growth), central bank activities have taken center stage. Investors are focusing on central bankers’ efforts to monetize this debt, as well as the overall effectiveness of such monetization. With the U.S. Federal Reserve enacting a tighter monetary regime during the past two years (via its decision to begin tapering its aggressive bond-buying program), harmful second-order effects are exacerbating the situation.

Currency and commodity pressures, for instance, are causing former accumulators of currency reserves and sovereign wealth to reverse course.

As depicted here, liquidity measures by central banks like the European Central Bank and the Bank of Japan have been countered by the aggressive selling of foreign reserves and sovereign wealth, as these entities contend with the Fed’s divergent path.

In the short term, we believe financial markets often overreact to negative news, and securities prices suffer as a result. Despite these near-term downswings, we invite you to join us in keeping a long-term perspective.


The views expressed represent the Manager's assessment of the market environment as of March 2016 and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.

Carefully consider the Funds' investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds' prospectuses and their summary prospectuses, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

International investments entail risks not ordinarily associated with US investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations. Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

Subscribe

Subscribe to hear from our portfolio managers and analysts on trending topics

I'm interested in hearing from:
Or select:

Subscribe to Insights

Thank you for your subscription!

Top charts of the month