Delaware Small Cap Value Fund

Key features

  • Stocks are selected by a highly experienced, value-focused investment team of five sector specialists, averaging over 20 years of industry experience
  • Focus on a company’s ability to effectively deploy and generate sustainable free-cash flow
  • A disciplined investment process with a focus on risk mitigation that has been consistently applied for over 20 years
Fund information
Inception date11/09/1992
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDEVIX
CUSIP246097208

Institutional Class shares are available only to certain investors.

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 (10/31/2019)

as of quarter-end (09/30/2019)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)20.02%8.40%8.69%6.70%12.18%10.34%11/09/1992
Russell 2000 Value Index15.55%3.22%8.60%6.24%11.08%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.39%-4.87%7.42%7.00%11.46%10.30%11/09/1992
Russell 2000 Value Index-0.57%-8.24%6.54%7.17%10.06%n/a

Returns for less than one year are not annualized.

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
Gross0.90%
Net0.90%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
201913.49%3.43%0.39%n/an/a
2018-2.96%4.63%0.83%-19.26%-17.35%
20172.51%0.28%3.62%5.15%12.00%
20163.54%4.00%7.31%13.66%31.35%
20153.07%-1.08%-9.82%2.00%-6.21%
20142.95%3.73%-5.24%4.39%5.64%
201312.02%0.93%7.38%9.14%32.50%
201210.82%-4.27%3.97%2.80%13.37%
20117.23%-1.89%-19.12%16.47%-0.91%
20109.66%-7.43%12.90%14.57%31.30%
2009-13.57%16.80%22.86%6.68%32.31%

Institutional Class shares are available only to certain investors.

Portfolio characteristics - as of 10/31/2019Russell 2000 Value Index
Number of holdings1051,173
Market cap (median) Source: FactSet$3.0 billion600475000.000000000
Market cap (weighted average) Source: FactSet$3.7 billion2112473581.610000000
Portfolio turnover (last fiscal year)18%n/a
Beta (relative to Russell 2000 Value Index) (view definition)0.99n/a
Annualized standard deviation, 3 years (view definition)17.86n/a
Portfolio composition as of 10/31/2019Total may not equal 100% due to rounding.
Domestic equities96.0%
Cash and cash equivalents2.6%
International equities & depositary receipts1.4%
Top 10 holdings as of 10/31/2019

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

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.

Holdings based by issuer.

Holding% of portfolio
MasTec Inc.2.79%
East West Bancorp Inc.2.42%
ITT Inc.1.91%
Hancock Whitney Corp.1.88%
Teradyne Inc.1.63%
Stifel Financial Corp.1.59%
HANOVER INSURANCE GROUP INC1.59%
WEBSTER FINL CORP1.58%
Selective Insurance Group Inc.1.54%
F.N.B CORP1.51%
Total % Portfolio in Top 10 holdings18.44%
Sector allocation as of 10/31/2019

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 services28.6%
Technology11.9%
REITs9.4%
Capital spending9.2%
Consumer services9.0%
Utilities5.5%
Basic industry5.0%
Energy4.9%
Consumer cyclical4.2%
Consumer staples3.5%
Healthcare3.1%
Transportation2.3%
Business services1.0%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20190.0000.000
20183.9620.605
20170.6140.421
20160.0000.433
20152.8950.454
20142.6160.312
20131.1010.173
20120.2540.190
20111.8060.000
20100.1400.000
20090.0000.076

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.

Institutional Class shares are available only to certain investors.

Chris Beck

Christopher S. Beck, CFA

Executive Director, Chief Investment Officer — US Small-Mid Cap Value Equity

Start date on the Fund: May 1997

Years of industry experience: 38

(View bio)


Kelly McKee

Kelley McKee Carabasi, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 17

(View bio)


Steve Catricks

Steven G. Catricks, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 20

(View bio)


Kent Madden

Kent P. Madden, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 23

(View bio)


Michael Foley

Michael Foley, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2019

Years of industry experience: 10

(View bio)


Institutional Class shares are available only to certain investors.

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 pricenone
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.64%
Distribution and service (12b-1) feesnone
Other expenses0.26%
Total annual fund operating expenses0.90%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.90%

Institutional Class shares are available only to certain investors.

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

Delaware Small Cap Value Fund Quarterly commentary March 31, 2018

Market review

Market volatility increased during the first quarter of 2018 and spiked in February. From Jan. 23 to Feb. 8, the Russell 2000® Value Index, the Fund’s benchmark, declined 9.33%. The benchmark recovered somewhat, but remained negative and ended the quarter down 2.64%. Value stocks underperformed growth stocks during the first quarter, with the Russell 2000® Growth Index advancing 2.30%. Small-cap value stocks held up better than large-cap value stocks, as the large-cap Russell 1000® Value Index fell 2.83% for the quarter.

Within the Russell 2000 Value Index, the returns of companies in its energy sector were hit the hardest during the first quarter, as many investors feared that current oil prices might not be sustainable. As a result, the energy sector fell 9.98% for the first quarter. During this period, the yield on the 10-year Treasury note increased from 2.40% to 2.74%, which hurt companies in the yield sensitive real estate investment trust (REIT) and utilities sectors of the benchmark. The only sectors in the benchmark to advance during the quarter were healthcare, business services, and financial services. In the healthcare sector, companies in the biotechnology industry drove returns.

During the first quarter, the Senate confirmed Jerome H. Powell as chairman of the Federal Reserve. At its March meeting, the Federal Open Market Committee (FOMC) increased the federal funds rate by 0.25 percentage points to a target range of 1.50% to 1.75%. The fourth quarter gross domestic product (GDP) growth rate was a robust 2.9% and full year GDP growth was 2.3%. The unemployment rate remained low, at 4.1%, and weekly initial unemployment claims on March 23, 2018 reached the lowest level since January 1973, at 215,000. The Conference Board Consumer Confidence Index® continued to measure above 100 with a March survey of 127.7. This was the Index’s 20th consecutive month above 100, which in our view is a positive sign for the strength of the economy. These readings keep us cautiously optimistic about the US economy (Source: Bloomberg).

Within the Fund

During the first quarter, stock selection was the main detractor from the Fund’s relative performance.

One of the Fund’s detractors during the quarter was Olin Corp., a commodity chemical company that primarily produces chlorine, caustic soda, epoxy, and derivative chlorine products. Shares of Olin declined 14% during the quarter after reporting weaker-than-expected fourth quarter earnings. We modestly increased the Fund’s weight in Olin following the pullback as the company was trading at what we viewed as an attractive valuation. We remain positive on Olin as we think the company has strong fundamentals in its core chlor alkali business.

Stock selection in the energy sector was the main detractor from the Fund’s relative performance during the quarter. SM Energy Co. is an independent exploration and production company with operations in the Permian Basin, Eagle Ford Shale, and Bakken Shale areas of the United States. The stock declined 18% during the quarter. SM Energy’s fiscal fourth quarter results were shy of expectations, and the company increased its capital budget for 2018, putting pressure on the stock. We think the company’s overall production profile is solid and healthy relative to its peers. We maintained the Fund’s position in SM Energy as we believe its shares are undervalued and that the company is likely to use the proceeds from recent asset sales to pay down debt and improve its balance sheet.

Stock selection in the consumer staples sector detracted from the Fund’s relative performance during the quarter. Shares of convenience store distributor Core-Mark Holding Co. Inc. finished the quarter down 32%. The weakness during the quarter was due to softer-than-anticipated fourth quarter results. These soft results were largely driven by a combination of weaker operating performance at two of the company’s distribution facilities and greater-than-anticipated declines in cigarette carton volumes. We maintained the Fund’s position in Core-Mark Holding during the quarter, however, as we view the stock as attractively valued and believe that the company’s issues are largely transitory in nature.

Stock selection in the basic industry sector contributed to the Fund’s relative performance during the quarter. KapStone Paper and Packaging Corp. is a manufacturer and distributor of containerboard and specialty paper products. Shares of KapStone Paper and Packaging increased 51% during the quarter. The company announced it had entered into a definitive merger agreement with a larger containerboard competitor, WestRock, at $35.00 per share, a roughly 32% premium to the company’s prior closing price. We exited the Fund’s position in KapStone Paper and Packaging as we felt the deal fully valued the company and we did not believe there would be a competing bid.

Validus Holdings Ltd. is an insurance holding company with subsidiaries that offer global reinsurance and specialty insurance products. Shares of Validus Holdings increased 44% during the quarter as the company announced that it had signed an agreement to be acquired by a larger competitor, American International Group, for $5.4 billion in cash. We sold the Fund’s position in Validus Holdings before the end of the quarter.

PTC Inc. (formerly Parametric Technology Corporation) develops and delivers software that is used in computer-aided design, product lifecycle management, and the Internet of Things (IoT) applications. Shares of PTC increased 28% during the quarter as the company reported strong results for its fiscal first quarter. The company also reported software bookings that exceeded prior estimates, which led the company to increase its forward-revenue and free-cash-flow guidance. We reduced the Fund’s position in PTC during the quarter as the company’s shares were trading at higher valuation measures.

At the end of the first quarter, the Fund remained overweight some of the more cyclical sectors, as we believe valuations and free-cash-flow generation continued to be more attractive in these sectors. We also believed these sectors were well positioned to benefit from the reduced US corporate tax rate. The largest overweight sector positions in the Fund were in capital spending, basic industry, and technology. In the capital spending sector, we purchased one new company. The Fund remains underweight the defensive sectors, including REITs and utilities, as they appear less attractive to us on a valuation basis relative to other sectors.

Outlook

In our view, the US economy should continue on its path of modest economic growth, as we still believe it will be difficult for the annual US GDP growth rate to break out of the 2% to 4% range. We expect Fed Chairman Powell to take a pragmatic approach when increasing interest rates. We will pay close attention to the Fed’s message, as well as to the consumer and corporate spending environments.

Our team’s disciplined philosophy remains unchanged. We continue to focus on bottom-up stock selection — and specifically on identifying companies that, in our view, trade at attractive valuations, generate strong free-cash flow, and implement shareholder-friendly policies through share buybacks, dividend increases, and debt reduction. In that regard, we are encouraged by the number of companies that continue to meet these criteria. While market volatility may remain at these higher levels, we believe the moderate growth, low inflation, low interest rate environment that has supported equity prices should continue throughout 2018.

Past performance is not a guarantee of future results.

Gross domestic product is a measure of all goods and services produced by a nation in a year.

The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 1000 Value Index measures the performance of the large-cap value segment of the US equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

The Conference Board Consumer Confidence Index is a barometer of the health of the US economy from the perspective of the consumer. The index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income.

Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.

[466236] 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.

Document must be used in its entirety.

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

Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

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.

The Fund’s investment manager, Delaware Management Company (Manager), may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited, to execute Fund security trades on behalf of the Manager. The Manager may also seek quantitative support from MIMGL.

Investing involves risk, including the possible loss of principal.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

REIT investments are subject to many of the risks associated with direct real estate ownership, including changes in economic conditions, credit risk, and interest rate fluctuations.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 11/15/2019)

Institutional ClassPriceNet change
NAV$65.280.22
Max offer price$65.28n/a

Total net assets (as of 10/31/2019)

$4.2 billion all share classes

Overall Morningstar RatingTM

 
Institutional Class shares (as of 10/31/2019)
RatingNo. of funds
Overall5387
3 Yrs4387
5 Yrs4342
10 Yrs5238
Morningstar categoryMorningstar Small Value Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 10/31/2019)

YTD ranking46 / 429
1 year52 / 423
3 years93 / 387
5 years64 / 342
10 years21 / 238
Morningstar categoryMorningstar Small Value Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 10/31/2019)

YTD ranking155 / 941
1 year163 / 934
3 years463 / 830
5 years282 / 676
10 years140 / 491
Lipper classificationLipper Small-Cap Core Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

Russell 2000® Value Index (view definition)

Morningstar Small Value Category (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information