VOYA INFRASTRUCTURE, INDUSTRIALS AND MATERIALS FUND Commentary | 4Q22
Voya Infrastructure, Industrials and Materials Fund
Total return with enhanced stability through focused infrastructure investments and call writing
Strategy overview
The Fund seeks potential enhanced stability of returns over a market cycle ― through investments in global companies with potential to benefit from increased infrastructure spending, and by selling call options on select equity indexes or exchange-traded funds.
Performance
For the quarter, the Fund provided a total return of 14.14% on a net asset value (NAV) basis and a total return of 8.90% on a market price basis. For the same period, the Fund's reference Index, the MSCI All Country World Index, returned 9.76%.
Equity portfolio
For the reporting period, the equity sleeve of the Fund outperformed its reference index, the MSCI All Country World Index, due to favorable stock selection. On the regional level, portfolio holdings within North America and Asia/Pacific ex-Japanregion contributed the most, while portfolio holdings in Japan detracted.
At the sector level, stock selection within the industrials, materials and energy sectors had the largest positive impact on performance. Among the key contributors were lack of exposure to Dominion Energy Inc., and overweight positions in Halliburton Co. and Rio Tinto Ltd. By contrast, stock selection in the information technology sector had a negative impact on results. On an individual stock level basis, the overweight to Cheniere Energy, not owning Airbus SE and the overweight to Telia Co. AB were among key detractors.
Option portfolio
For the reporting period, the Fund's covered call strategy had a negative impact on relative returns. The Fund implemented this strategy by typically writing call options on sector and regional exchange-tradedfunds (ETFs), the selection and allocation of which resulted from an optimization intended to track the reference Index of the Fund closely. The strike prices of the options written were typically at or near the money, with expiration dates around one month at inception.
The Fund's covered call strategy seeks to generate premiums and retain some potential for upside appreciation. This strategy detracted from returns during the period as the positive performance of the equity markets resulted in losses on the short call options.
INVESTMENT MANAGEMENT
Commentary | 4Q22 | Voya Infrastructure, Industrials and Materials Fund |
Outlook and current strategy
The Fund focuses on global companies with potential to benefit from increased government and private infrastructure spending. The Fund uses multi-factorstock selection models and fundamental input from sector analysts to invest in a broad range of companies from the global infrastructure, industrials and materials sectors, and seeks enhanced total return potential by selling call options on select equity indices, securities or ETFs.
The major US and non-US stock Indexes overcame negative returns in December to end the fourth quarter with gains. US stock results varied by market capitalization: Midcaps were the strongest performers, followed by large caps, then by small caps. Across market cap segments, value styles outperformed growth styles. Technology stocks continued to suffer from rising interest rates and posted losses for the quarter.
Broad gauges of US and non-US bonds posted gains for the quarter, though non-US bonds gained more than twice as much as US bonds. Results varied at the asset-classlevel: Long-termUS Treasury securities sustained the largest losses, whereas long-termcorporate bonds and high yield were among the strongest performers. Shorter-termcorporate bonds and government securities saw positive returns.
Investors can be forgiven for wanting to put 2022 in the rearview mirror. High inflation, rate hikes, market volatility, the war in Ukraine and resurging Covid infections top the list of things we would like to move past. Will 2023 bring more troubles, or do investors have reasons for optimism? The Eurozone appears to be headed for a recession, whereas the United States seems slightly less at risk. The markets are hunting for imbalances, such as whether China's return to growth will be stymied by its significant debt burden. There is at least one reason for optimism: The end of the global interest-ratehiking cycle may be in sight, letting markets focus more on economic fundamental factors.
Given these uncertainties in the global market outlook, we expect the Fund to continue to benefit from its option- writing activities.
Holdings detail
Companies mentioned in this report - percentage of portfolio investments, as of 12/31/22: Dominion Energy Inc. 0%, Halliburton Co. 0.68%, Rio Tinto Ltd. 1.00%, Cheniere Energy 0.65%, Airbus SE 0% and Telia Co. AB 0.33%; 0% indicates that the security is no longer in the portfolio. Portfolio holdings are subject to change daily.
Commentary | 4Q22 | Voya Infrastructure, Industrials and Materials Fund |
Disclaimer
The MSCI All Country World Index (MSCI ACWI) captures large- andmid-cap representation across 23 developed market (DM) and 24 emerging market (EM) countries. With 2,882 constituents, the index covers approximately 85% of the global investable equity opportunity set. Investors cannot invest directly in an index.
Past performance is no guarantee of future results. The performance quoted represents past performance. Current performance may be lower or higher than the performance data quoted. All investing involves the inherent risks of fluctuating prices and the uncertainties of rates of return and yield. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost.
Total investment return at market share price measures the change in the market value of your investment assuming reinvestment of dividends, capital gain distributions and return of capital distributions/allocations, if any, in accordance with the provisions of the Fund's dividend reinvestment plan. Total investment return at market share price is not annualized for periods less than one year. Closed-end funds like the Fund do not continuously offer shares for sale and are not required to buy shares back from investors upon request. Shares of closed- end funds trade on national stock exchanges. Therefore, market share prices are not directly affected by Fund expenses or fees, which ordinarily have the effect of lowering total return.
Total investment return at net asset value has been calculated assuming a purchase at net asset value at the beginning of the period and a sale at net asset value at the end of the period; and assumes reinvestment of dividends, capital gain distributions and return of capital distributions/allocations, if any, in accordance with the provisions of the dividend reinvestment plan. Net asset value equals total assets minus total liabilities, divided by the number of shares outstanding. Net asset value is net of all fund expenses, including operating costs and management fees. Total investment return at net asset value is not annualized for periods less than one year.
Principal risks. Price volatility, liquidity, and other risks that accompany an investment in equity securities of domestic and foreign companies, and small and mid-sized capitalized companies. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. Risks of foreign investing are generally intensified for investments in emerging markets.
Options risk. The Fund may purchase put and call options and may write (sell) put options and call options and is subject to Options Risk. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counter-parties to meet the terms of the contract. When an option is exercised or closed out, the Fund may be required to sell portfolio securities or to deliver portfolio securities to satisfy its obligations when it would not otherwise choose to do so, or the Fund may choose to sell portfolio securities to realize gains to offset the losses realized upon option exercise. Such sales or delivery would involve transaction costs borne by the Fund and may also result in realization of taxable capital gains, including short-term capital gains taxed at ordinary income tax rates, and may adversely impact the Fund's after-tax returns.
This Fund has additional risks that you should consider, such as market discount risk, investment and market risk, foreign investment and emerging markets risk, foreign (non-US) currency risk, Asia Pacific regional and country risk, issuer risk, equity risk, distribution risk, tax risk, dividend risk, small-cap and mid-cap company risk.
The Fund employs a quantitative model to execute its investment strategy. Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect performance. Furthermore, there can be no assurance that the quantitative models used in managing the strategy will perform as anticipated or enable the strategy to achieve its objective.
This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance
of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults, (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. Past performance is no guarantee of future results.
The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Portfolio holdings are fluid and are subject to daily change based on market conditions and other factors.
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Voya Infrastructure Industrials and Materials Fund published this content on 27 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2023 10:51:41 UTC.
