Delaware High-Yield Opportunities Fund


Delaware High-Yield Opportunities Fund seeks total return and, as a secondary objective, high current income.


The Fund primarily invests in high yield corporate bonds. The Fund’s manager engages thorough credit research to attempt to capture the high yield bond market’s premium return potential.

Key features

  • A flexible core bond fund designed to weather market cycles
  • An actively managed bond portfolio emphasizing risk control and income generation
  • An experienced management team with more than 25 years average industry experience
Fund information
Inception date12/30/1996
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
Payroll DeductionYes

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 (01/31/2018)

as of quarter-end (12/31/2017)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.43%6.14%4.21%3.84%6.78%6.68%12/30/1996
Max offer price-4.06%1.36%2.62%2.90%6.29%6.45%
BofA Merrill Lynch US High Yield Constrained Index0.64%6.74%6.38%5.66%8.19%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.48%7.03%4.06%4.06%6.54%6.69%12/30/1996
Max offer price-3.98%2.18%2.48%3.11%6.04%6.45%
BofA Merrill Lynch US High Yield Constrained Index0.41%7.48%6.40%5.81%7.95%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

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Nov. 28, 2017 through Nov. 28, 2018. Please see the fee table in the Fund's prospectus for more information. Additionally, the Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Fund's Board of Trustees.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
Portfolio characteristics - as of 01/31/2018BofA Merrill Lynch US High Yield Constrained Index
Number of holdings2071,906
Number of credit issuers172
Portfolio turnover (last fiscal year)90%%
Effective duration (weighted average) (view definition)4.46 years4.05 years
Effective maturity (weighted average) (view definition)6.20 years6.33 years
Yield to maturity (view definition)5.80%6.16%
Average market price (view definition)$110.27$100.77
Average coupon (view definition)6.44%6.37%
Yield to worst (view definition)5.37%5.80%
SEC 30-day yield with waiver (view definition)4.21%
SEC 30-day yield without waiver (view definition)4.16%
Annualized standard deviation, 3 years (view definition)5.44n/a
Portfolio composition as of 01/31/2018Total may not equal 100% due to rounding.
Foreign bonds14.9%
Cash and cash equivalents1.5%
Top 10 fixed income holdings as of 01/31/2018

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

List excludes cash and cash equivalents.

Holding% of portfolio
Calpine Corp. 5.750 1/15/20251.12%
Altice Luxembourg S.A. 7.750 5/15/20221.10%
VTR Finance BV 6.875 1/15/20241.02%
Prime Security Services Borrower LLC Prime Finance Inc. 9.250 5/15/20230.98%
Murphy Oil Corp. 6.875 8/15/20240.96%
Sprint Corp. 7.125 6/15/20240.94%
ESH Hospitality Inc. 5.250 5/1/20250.93%
Zayo Group LLC Zayo Capital Inc. 6.375 5/15/20250.90%
USIS Merger Sub Inc. 6.875 5/1/20250.85%
United Rentals North America Inc. 5.500 5/15/20270.84%
Total % Portfolio in Top 10 holdings9.64%

Fixed income sectors as of 01/31/2018

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.
Basic industry16.0%12.0%
Technology & electric6.2%5.8%
Capital goods4.4%5.4%
Emerging markets2.3%0.0%
Consumer goods2.3%2.7%
Financial services2.2%3.7%
Credit quality as of 01/31/2018

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
Return of

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.

Risk managed solutions

Roger Early, Head of Fixed Income Investments, discusses why the team’s assets under management, structure, and mindset are strengths that help distinguish it from others. [Runtime: 2:14]

Watch the video

Read video transcript

Adam Brown

Adam H. Brown, CFA

Senior Vice President, Senior Portfolio Manager, Co-Head of High Yield — Macquarie Investment Management, Americas

Start date on the Fund: November 2014

Years of industry experience: 19

(View bio)

John McCarthy

John P. McCarthy, CFA

Senior Vice President, Senior Portfolio Manager, Co-Head of High Yield — Macquarie Investment Management, Americas

Start date on the Fund: December 2012

Years of industry experience: 31

(View bio)

Craig Dembeck

Craig C. Dembek, CFA

Senior Vice President, Head of Credit Research — Macquarie Investment Management, Americas

Start date on the Fund: December 2012

Years of industry experience: 23

(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: 32

(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 fees0.65%
Distribution and service (12b-1) fees0.25%
Other expenses0.25%
Total annual fund operating expenses1.15%
Fee waivers and expense reimbursements(0.10%)
Total annual fund operating expenses after fee waivers and expense reimbursements1.05%

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 0.80% of the Fund's average daily net assets from Nov. 28, 2017 through Nov. 28, 2018. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund. Additionally, the Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. All Class A shares currently bear 12b1-fees at the same rate, the blended rate based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Fund's Board of Trustees.

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Delaware High-Yield Opportunities Fund Quarterly commentary December 31, 2017


US high yield bonds, as measured by the BofA Merrill Lynch US Cash Pay High Yield Index, returned +0.4% for the fourth quarter, while European and global high yield bonds returned +0.8% and +0.5%, respectively, based on BofA Merrill Lynch indices.

The US market returned 0.4% during October against the backdrop rising policy rates, record high stocks, and tax law angst. The market was down modestly in November (-0.3%), which obscured a roller-coaster month with dramatic sector price declines and heavy retail selling early, followed by a recovery on the strength of rising energy and stock prices and tax reform progress. Prices were up slightly in December (0.3%), as rising equity prices and successful tax legislation offset higher policy rates and mixed economic data. In the fourth quarter, US high yield bond yields rose by 21 basis points to 6.1%, while spreads narrowed by 11 basis points, to 404 basis points. (One basis point equals one-hundredth of a percentage point.)

Risk trumped quality during the quarter, with CCC-rated bonds returning 0.6% on the strength of a 6.6% advance in the S&P 500 Index, followed by B-rated bonds at 0.4% and BB-rated bonds at 0.3%. The strongest performing sectors were energy (+2.6%), utilities (+2.1%), and metals (+1.8%), while telecommunications (-2.8%), consumer products (-1.8%), and cable (-1.3%) lagged.

New issuance totaled $73 billion for the quarter, bringing year-to-date issuance to $327 billion, up 15% over 2016 and the fourth highest on record. Refinancing and general corporate purposes (GCP) have represented 80% of issuance year to date, with just 18% slated for leveraged buyout (LBO) activity. For the full year, upgrades exceeded downgrades by 1.4x, while defaults totaled just 1.5%, well below 2016’s energy-inflated 4.3%.

Sources: Bank of America Merrill Lynch and Bloomberg.

Within the Fund

The Fund’s strongest sector contributors were telecommunications, banking, and utilities. The telecom position outperformed relative to the Fund’s benchmark, the BofA Merrill Lynch US High Yield Constrained Index, due to the Fund’s underweight in wireless sector bonds, which significantly underperformed during the fourth quarter when a large and widely anticipated merger transaction failed to take place. The Fund’s overweight in the banking sector aided performance as a result of strong profit trends in the sector. The Fund’s overweight in utilities also contributed to performance, as the sector outperformed as a result of a flight to quality during the first two months of the quarter.

The Fund’s largest sector detractors were leisure, retail, and financial services. The Fund was overweight in the leisure (hotels, gaming) sector, which underperformed the benchmark as a result of adverse operating metrics. The Fund’s retail exposure underperformed as a result of declining sector profitability and adverse credit selection. The Fund’s overweight to financial services, which underperformed on the expectation that rising rates in 2018 would affect sector profitability, also detracted from results.


Against a backdrop of tight valuations, two unknowns need to be evaluated: the duration of the credit cycle and the credit implications of corporate tax law changes. With respect to the credit cycle, high yield leverage has declined for five straight quarters; earnings before interest, taxes, depreciation, and amortization (EBITDA) margins are the highest since the third quarter of 2015; new issuance remains overwhelmingly focused on credit-enhancing refinancing activity; upgrades continue to exceed downgrades; and defaults remain well below average.

With respect to tax law changes, it is likely that overleveraged CCC-rated issuers will be net losers from reduced interest deductibility and net operating loss (NOL) carryforwards, while stronger B-rated and BB-rated issuers will likely be net beneficiaries from the reduction in the corporate tax rate to 21% and accelerated depreciation. While these tax law changes argue for a gradual increase in CCC-rated defaults, the creation of a new, structural disincentive against highly leveraged LBOs and the lengthening trend of improving credit metrics suggests to us a supportive 2018 environment for high yield valuations.

Past performance is not an indicator of future results.

Index definitions

The BofA Merrill Lynch US Cash Pay High Yield Index tracks the performance of US dollar–denominated below-investment-grade corporate debt, currently in a coupon paying period, that is publicly issued in the US domestic market. Qualifying securities must have at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule, and a minimum amount outstanding of $100 million.

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.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

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

[410185] 01/18

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.

Document must be used in its entirety.

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 fixed income security that is held by the Fund may be prepaid prior to maturity, potentially forcing the Fund 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 high yield secondary market is particularly susceptible to liquidity problems when institutional investors, such as mutual funds and certain other financial institutions, temporarily stop buying bonds for regulatory, financial, or other reasons. In addition, a less liquid secondary market makes it more difficult for the Fund to obtain precise valuations of the high yield securities in its portfolio.

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.

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.

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 02/16/2018)

Class APriceNet change
Max offer price$3.97n/a

Total net assets (as of 01/31/2018)

$248.8 million all share classes

Overall Morningstar RatingTM

Class A shares (as of 01/31/2018)
Class ANo. of funds
3 Yrs2605
5 Yrs2500
10 Yrs3325
Morningstar categoryHigh Yield Bond

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 01/31/2018)

YTD ranking503 / 757
1 year292 / 698
3 years495 / 605
5 years388 / 500
10 years154 / 325
Morningstar categoryHigh Yield Bond

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 01/31/2018)

YTD ranking479 / 729
1 year286 / 670
3 years474 / 578
5 years369 / 476
10 years144 / 306
Lipper classificationLipper High Yield Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

BofA Merrill Lynch US High Yield Constrained Index (view definition)

Morningstar High-Yield Bond Category (view definition)

Lipper High Yield Funds Average (view definition)

Additional information