Ivy Funds Suffers Another High-Level Manager Departure

 Waddell & Reed Financial , advisor to the Ivy Funds, announced on July 9 that William Nelson, manager of the $12 billion  Ivy High Income (WHIAX), was fired from the firm. The firm stated that Nelson's termination was unrelated to his portfolio management responsibilities but added little else. We most recently had rated this fund Neutral, but we now have moved our Morningstar Analyst Rating to Under Review.

The departure of another fixed-income manager leaves an already thinly resourced team stretched. Nelson, who joined Waddell & Reed in January 1995 and had managed sibling fund Waddell & Reed High Income since 2008, only took the helm of Ivy High Income in November 2013 when then-manager Bryan Krug left the firm. Nelson has been replaced by Chad Gunther, an 11-year veteran at Waddell & Reed. He was previously an assistant manager of the fund. With the departure of two senior team members and no replacements, the firm's fixed-income resources are relatively small given its significant asset base.

The changes on the fixed-income team come on the heels of another high-level departure at Waddell & Reed: In May 2014, the firm announced Ryan Caldwell, comanager on flagship fund  Ivy Asset Strategy (WASAX), would be leaving in mid-June. At that time, the firm said Caldwell would be kept on in a consulting role for two years, but on June 20, the firm reversed course, saying Caldwell would no longer contribute to the fund. While this resolves potential conflicts of interest, Caldwell was a key contributor, and his departure is a loss. We have lowered our rating on Ivy Asset Strategy to Neutral from Bronze.