Delaware Corporate Bond Fund

Key features

  • A high quality, research-driven corporate bond fund designed for long-term growth
  • Leverages the team’s deep credit expertise and sizable presence in corporate bond market
  • An experienced management team and a time-tested process and philosophy
Fund information
Inception date09/15/1998
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers
NASDAQDGCAX
CUSIP245908785
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
Payroll DeductionYes
IRAsYes

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Average annual total return

as of month-end (09/30/2018)

as of quarter-end (09/30/2018)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-2.57%-1.72%2.92%3.23%7.30%6.15%09/15/1998
Max offer price-6.99%-6.18%1.35%2.28%6.81%5.91%
Bloomberg Barclays US Corporate Investment Grade Index-2.33%-1.19%3.12%3.54%6.35%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.33%-1.72%2.92%3.23%7.30%6.15%09/15/1998
Max offer price-3.19%-6.18%1.35%2.28%6.81%5.91%
Bloomberg Barclays US Corporate Investment Grade Index0.97%-1.19%3.12%3.54%6.35%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 4.50% and are subject to an annual distribution fee.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Expense ratio
Gross0.94%
Net0.82%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from April 1, 2018 through April 1, 2019. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2018-2.71%-1.17%1.33%n/an/a
20171.78%2.82%1.55%0.86%7.17%
20162.81%3.31%2.02%-2.70%5.44%
20152.64%-2.64%-0.94%-0.98%-1.98%
20143.64%3.53%-0.62%0.16%6.81%
20130.82%-3.51%0.47%1.71%-0.60%
20123.78%2.96%4.84%2.29%14.59%
20111.63%2.14%0.73%2.62%7.31%
20104.07%1.43%6.38%-0.71%11.49%
2009-1.98%14.62%11.46%2.89%28.85%
2008-0.02%-1.72%-6.83%0.00%-8.44%
Portfolio characteristics - as of 09/30/2018Bloomberg Barclays US Corporate Investment Grade Index
Number of holdings318n/a
Portfolio turnover (last fiscal year)158%n/a
Effective duration (weighted average) (view definition)6.41 years7.24 years
Effective maturity (weighted average) (view definition)10.31 years10.85 years
Yield to maturity (view definition)4.68%4.07%
Average market price (view definition)$105.30$100.26
Average coupon (view definition)4.84%3.99%
Yield to worst (view definition)4.54%4.07%
SEC 30-day yield with waiver (view definition)3.55%
SEC 30-day yield without waiver (view definition)3.47%
Annualized standard deviation, 3 years (view definition)3.64n/a
Portfolio composition as of 09/30/2018Total may not equal 100% due to rounding.
Credits99.1%
U.S. government securities0.7%
Municipal bonds0.2%
Top 10 fixed income holdings as of 09/30/2018

Holdings are as of the date indicated and subject to change.

List excludes cash and cash equivalents.

Holding% of portfolio
TELUS Corp. 4.600 11/16/20481.06%
Southwestern Electric Power Co. 4.100 9/15/20280.97%
CVS Health Corp. 4.300 3/25/20280.93%
Anglo American Capital PLC 4.750 4/10/20270.93%
Goldman Sachs Group Inc. 6.000 6/15/20200.93%
Verizon Communications Inc. 4.500 8/10/20330.88%
Becton Dickinson and Co. 3.363 6/6/20240.87%
Bayer US Finance II LLC 4.375 12/15/20280.87%
Georgia-Pacific LLC 8.000 1/15/20240.86%
BHP Billiton Finance USA Ltd. 6.250 10/19/20750.85%
Total % Portfolio in Top 10 holdings9.15%

Fixed income sectors as of 09/30/2018

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.
SectorFund
Financial institutions35.3%
Communications13.6%
Energy10.3%
Utility9.2%
Consumer noncyclical8.8%
Consumer cyclical5.2%
Basic industry4.6%
Technology4.4%
Capital goods3.9%
Noncorporate2.8%
Transportation1.0%
Municipal bonds0.2%
Credit quality as of 09/30/2018
RatingFundBenchmark
AAA1.2%1.9%
AA2.1%8.4%
A23.7%40.6%
BBB60.1%49.1%
BB9.7%0.0%
B3.2%0.0%

Total may not equal 100% due to rounding. The Fund’s investment manager, Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust, receives “Credit Quality” ratings for the underlying securities held by the Fund from three “nationally recognized statistical rating organizations” (NRSROs): Standard & Poor’s (S&P), Moody’s Investors Service, and Fitch, Inc. The credit quality breakdown is calculated by DMC based on the NRSRO ratings. If two or more NRSROs have assigned a rating to a security the higher rating (lower value) is used. If only one NRSRO rates a security, that rating is used. For securities rated by an NRSRO other than S&P, that rating is converted to the equivalent S&P credit rating. Securities that are unrated by any of the three NRSROs are included in the “not rated” category when applicable. Unrated securities do not necessarily indicate low quality. More information about securities ratings is contained in the Fund’s Statement of Additional Information.

Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20180.0000.157
20170.0000.206
20160.0000.193
20150.0010.217
20140.0600.244
20130.0960.256
20120.1890.265
20110.1360.302
20100.2710.325
20090.0000.325
20080.0000.284

1If a Fund makes a distribution from any source other than net income, it is required to provide shareholders with a notice disclosing the source of such distribution (each a "Notice"). The amounts and sources of distributions reported above and in each Notice are only estimates and are not provided for tax reporting purposes. Each Fund will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Fund's distributions for federal income tax purposes. The information in the table above will not be updated to reflect any subsequent recharacterization of dividends and distributions. Click here to see recent Notices pertaining to the Fund (if any).

2Information on return of capital distributions (if any) is only provided from June 1, 2014 onward.

3Includes both short- and long-term capital gains.

Mike Wildstein

Michael G. Wildstein, CFA

Executive Director, Head of Credit and Insurance Asset Management

Start date on the Fund: November 2014

Years of industry experience: 17

(View bio)


Roger Early

Roger A. Early, CPA, CFA

Executive Director, Global Co-Head of Fixed Income — Macquarie Investment Management

Start date on the Fund: May 2007

Years of industry experience: 42

(View bio)


Wayne Anglace

Wayne A. Anglace, CFA

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: July 2016

Years of industry experience: 20

(View bio)


Craig Dembeck

Craig C. Dembek, CFA

Executive Director, Global Head of Credit Research

Start date on the Fund: December 2012

Years of industry experience: 24

(View bio)


J. David Hillmeyer

David Hillmeyer, CFA

Executive Director, Head of Multisector/Global Fixed Income — Macquarie Investment Management, Americas

Start date on the Fund: November 2014

Years of industry experience: 25

(View bio)


Kashif Ishaq

Kashif Ishaq 

Senior Vice President, Global Head of Corporate Bond Trading

Start date on the Fund: November 2013

Years of industry experience: 16

(View bio)


Paul Matlack

Paul A. Matlack, CFA

Senior Vice President, Senior Portfolio Manager, Fixed Income Strategist

Start date on the Fund: December 2012

Years of industry experience: 33

(View bio)


John McCarthy

John P. McCarthy, CFA

Senior Vice President, Co-Head of High Yield, Senior Portfolio Manager

Start date on the Fund: December 2012

Years of industry experience: 31

(View bio)


You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in Delaware Funds by Macquarie. More information about these and other discounts is available from your financial intermediary, in the Fund's Prospectus under the section entitled "About your account," and in the Fund's statement of additional information (SAI) under the section entitled "Purchasing Shares."

The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering price4.50%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.48%
Distribution and service (12b-1) fees0.25%
Other expenses0.21%
Total annual fund operating expenses0.94%
Fee waivers and expense reimbursements(0.12%)
Total annual fund operating expenses after fee waivers0.82%

1The Fund’s investment manager, Delaware Management Company (Manager), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale dividend and interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent total annual fund operating expenses from exceeding 0.57% of the Fund’s average daily net assets from April 1, 2018 through April 1, 2019. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

This commentary is currently not available. Please check back later.

Delaware Corporate Bond Fund Quarterly commentary March 31, 2018

Market review

Investment grade markets came under pressure during the quarter amid a surge in volatility driven by rising inflationary concerns, US Federal Reserve policy angst, the threat of a trade war with China, and unprecedented turnover among the US president’s inner circle of advisors, creating additional market uncertainty. While the tariffs imposed by the United States are not expected to have a material impact on the domestic economy, the real risk lies in broader retaliatory measures from China. Combined with higher-than-expected new-issue supply, these risk factors drove investment grade credit to its weakest first quarter since 2008, despite a solid micro- and macroeconomic backdrop. Going forward, capital markets will likely be driven by sentiment from one of two scenarios: strong macro conditions that should support cyclical assets, or rising US inflation that quickens the Fed’s response and mutes growth. Fear seems to be surpassing any rosy economic outlooks at the moment.

US investment grade corporates underperformed the European investment grade market, which continues to benefit from the Corporate Sector Purchase Programme (CSPP) technical bid. Spread levels on the Bloomberg Barclays US Corporate Investment Grade Index widened by 0.16 percentage points over the quarter and the index returned -2.32% over the same period, underperforming duration-matched Treasurys by 0.79 percentage points. Performance was largely driven by rates and curve movement rather than idiosyncratic or credit risk, although event risk was not completely absent. Rails led the way down, as the sector’s long duration nature underperformed as rates surged. Subordinated bank debt also underperformed as investors turned to liquid bank debt as a conduit for reducing risk, despite solid fundamentals. Shorter duration sectors, such as homebuilders and leisure/lodging, outperformed on a relative basis, although every sector still generated negative total returns. Wirelines also outperformed the broader index, driven by solid earnings from AT&T along with a recent tender offer for $13 billion of outstanding debt, driving its spreads tighter.

Investment grade supply declined during the quarter, down 12.7% from last year’s record pace, but still ahead of expectations. While demand remains healthy, the market has experienced some supply indigestion that led to reduced issuer pricing power and increased new-issue concessions. The much anticipated $40 billion CVS-Aetna deal was the third largest corporate deal in history, behind Verizon ($49 billion) and InBev ($46 billion). The deal was well received by the market, with an impressive $121 billion in orders; it also served as an important barometer for overall investment grade market sentiment, especially ahead of other potential merger and acquisition-related deals. Global demand for investment grade credit remains positive, although rising foreign exchange (FX) hedge costs for foreign investors should be a headwind. Fund flows for the quarter totaled $27 billion, down 31% year over year. (Source: Bank of America, UBS, Lipper.)

Within the Fund

Contributors to performance:

  • Energy — Positive security selection was driven by exposure to higher-beta / lower-rated issues. West Texas Intermediate oil was up more than 7% to start the year, amid continued cooperation with Organization of the Petroleum Exporting Countries (OPEC) output quotas, shrinking inventories, and speculation that sanctions on Iran could be reimposed.
  • Electric — Security selection generated positive performance over the quarter, driven by exposure to high yield securities.
  • High yield — The Fund’s positioning within this out-of-benchmark sector generated positive performance for the quarter. High yield corporates outperformed investment grade during the quarter, given that the asset class has less interest rate sensitivity.
  • Cash and Treasurys — During this quarter of negative total returns, any cash and cash-surrogate holdings added to performance.

Detractors from performance:

  • Banking — Exposure to hybrids and subordinated debt detracted from quarterly performance. Subordinated bank debt has underperformed as investors turned to liquid bank debt as a conduit for reducing risk, despite solid fundamentals.
  • Technology — Security selection detracted from performance, driven by exposure to long-dated issues from names like Oracle and Corning.
  • Consumer noncyclical — Similarly, within the pharmaceutical and food/beverage subsectors, a lack of exposure to shorter-dated issues was a drag on performance as rates rose sharply over the period.
  • Emerging market debt — A small allocation to this out-of-benchmark sector detracted from performance, driven by exposure to long-dated bonds from issuers in China and Mexico (Alibaba Group Holding, Tencent Holdings, Grupo Televisa).

Outlook

With the current business cycle now approaching 8.5 years in duration, it seems clear that we are in the late stages of the expansion phase. However, unlike previous late-stage cycles, this one has been characterized by a massive increase in fiscal stimulus, supporting a further extension of the current cycle, albeit with the risk of a hard landing. In the near term at least, we believe this should support the case for credit in a market that has little margin for error with valuations at historic tights. Bondholder fundamentals also remain supportive as sales momentum continues to be strong and earnings growth accelerates globally. Expectations are high for the upcoming earnings season after fourth-quarter 2017 earnings growth was among the strongest since the first quarter of 2011. S&P 500® Index companies reported average year-over-year earnings growth of 16% and revenue growth of 7.9%. The new tax law remains positive for credit fundamentals, with widespread benefits across sectors. Finally, the technical backdrop within investment grade credit has been strong for the past few years, and with net issuance expected to be down 13% in 2018 (source: Bank of America), this should continue to serve as a tailwind. However, with central banks withdrawing support, there is less certainty as to how asset prices will perform against this backdrop.

We believe domestic growth is likely to accelerate in the near term, with the current macroeconomic outlook providing room for further expansion of the cycle through 2019. However, we believe central bank tightening (the European Central Bank’s tapering of QE and the unwinding of the Fed’s balance sheet) could increase asset price volatility. This could weigh on the business and credit cycle by 2020, and begin returning credit valuations towards longer-term mean levels.

We expect central bank easing to continue to decrease. The key risk for markets will be how fast and aggressively the Fed unwinds its accommodative policy. Despite investment grade credit’s weak performance in the first quarter, valuations remain in the 25th percentile range, so we do not view the selloff as an outright buying opportunity. That said, based on the fundamental backdrop, we believe the latest bout of technically driven weakness should reverse, leading to incremental spread tightening for investment grade credit, and we are finding additional investment opportunities at the margin.

Past performance is not a guarantee of future results.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US stock market.

Index performance returns do not reflect management fees, transaction costs, or expenses. Indices are unmanaged, and one cannot invest directly in an index.

[470293] 04/18

The views expressed represent the Manager’s assessment of the Fund and market environment as of the date indicated, 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. Information is as of the date indicated and subject to change.

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on its debt.

The Fund may also be subject to prepayment risk, the risk that the principal of a bond that is held by a portfolio will be prepaid prior to maturity, at the time when interest rates are lower than what the bond was paying. A portfolio may then have to reinvest that money at a lower interest rate.

High yielding, non-investment-grade bonds (junk bonds) involve higher risk than investment grade bonds.

The Fund may invest in derivatives, which may involve additional expenses and are subject to risk, including the risk that an underlying security or securities index moves in the opposite direction from what the portfolio manager anticipated. A derivatives transaction depends upon the counterparties’ ability to fulfill their contractual obligations.

Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

All third-party marks cited are the property of their respective owners.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 10/15/2018)

Class APriceNet change
NAV$5.54no chg
Max offer price$5.80n/a

Total net assets (as of 09/30/2018)

$1.2 billion all share classes

Overall Morningstar RatingTM

 
Class A shares (as of 09/30/2018)
Class ANo. of funds
Overall4181
3 Yrs3181
5 Yrs3152
10 Yrs482
Morningstar categoryMorningstar Corporate Bond Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 09/30/2018)

YTD ranking170 / 253
1 year165 / 246
3 years116 / 181
5 years93 / 152
10 years14 / 82
Morningstar categoryMorningstar Corporate Bond Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 09/30/2018)

YTD ranking188 / 270
1 year178 / 269
3 years116 / 212
5 years92 / 186
10 years15 / 114
Lipper classificationLipper Corporate Debt Funds BBB-Rated Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

Bloomberg Barclays US Corporate Investment Grade Index (view definition)

Morningstar Corporate Bond Category (view definition)

Lipper Corporate Debt Funds BBB-Rated Average (view definition)

Additional information