Delaware Floating Rate Fund

Key features

  • A floating rate bank loan fund designed to generate high current income
  • An actively managed portfolio built on a foundation of strong fundamental research
  • An experienced management team with nearly 25 years average industry experience
Fund information
Inception date02/26/2010
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers

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)7.16%4.23%4.16%2.82%n/a2.72%02/26/2010
S&P/LSTA Leveraged Loan Index6.31%2.67%4.08%3.83%n/a4.70%
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.64%4.62%4.37%2.90%n/a2.79%02/26/2010
S&P/LSTA Leveraged Loan Index0.99%3.10%4.53%3.98%n/a4.79%

Returns for less than one year are not annualized.

Benchmark lifetime returns are as of the month end following the Fund's inception date.

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, 2018 through Nov. 28, 2019. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return

Institutional Class shares are available only to certain investors.

Portfolio characteristics - as of 10/31/2019S&P/LSTA Leveraged Loan Index
Number of holdings1281,453
Number of credit issuers110
Portfolio turnover (last fiscal year)143%%
Effective duration (weighted average) (view definition).31 yearsn/a
Effective maturity (weighted average) (view definition)5.41 yearsn/a
Yield to maturity (view definition)6.24%n/a
Average market price (view definition)$98.54n/a
Average coupon (view definition)5.68%n/a
Yield to worst (view definition)6.12%n/a
SEC 30-day yield with waiver (view definition)5.13%
SEC 30-day yield without waiver (view definition)5.02%
Annualized standard deviation, 3 years (view definition)2.43n/a
Portfolio composition as of 10/31/2019Total may not equal 100% due to rounding.
Bank loans91.7%
High yield corporate bonds8.2%
Cash and cash equivalents0.2%
Top 10 fixed income holdings as of 10/31/2019

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

List excludes cash and cash equivalents.

Holding% of portfolio
Sprint Communications Inc. 3.250 1/30/20242.28%
Ensemble Health Partners 3.750 8/1/20261.74%
Diamond Sports Group Llc 3.250 7/18/20261.71%
Kindred AT Home 3.750 7/2/20251.64%
Applied Systems Inc. 8.320 9/15/20251.59%
Athenahealth Inc. 4.500 1/30/20261.57%
Ultimate Software Group Inc. (the) 3.750 4/15/20261.48%
Vistra Operations (tex Operations) 2.000 12/31/20251.48%
Edgewater Generation LLC 3.750 12/13/20251.44%
UGI Energy Services Llc 3.750 8/13/20261.38%
Total % Portfolio in Top 10 holdings16.31%
Fixed income sectors 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.

Telecommunication/cellular communication11.9%
Oil and gas8.4%
Broadcast radio and television5.9%
Business equipment and services5.5%
Industrial equipment4.2%
Chemical / plastics4.1%
Cable television3.3%
Building and development2.7%
Retailers (other than food/drug)2.4%
Containers and glass products2.4%
Financial intermediaries2.1%
Ecological services & equipment1.7%
Brokers, dealers & investment houses1.6%
Air transportation1.4%
Aerospace and defense1.3%
Food products1.2%
Food services1.2%
Beverage & tobacco1.0%
Forest products0.8%
Equipment leasing0.7%
Hotels/motels/inns and casinos0.6%
Nonferrous metals/minerals0.4%
Credit quality as of 10/31/2019

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 (Institutional Class)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.

Institutional Class shares are available only to certain investors.

Adam Brown

Adam H. Brown, CFA

Managing Director, Senior Portfolio Manager

Start date on the Fund: November 2011

Years of industry experience: 21

(View bio)

John McCarthy

John P. McCarthy, CFA

Managing Director, Senior Portfolio Manager

Start date on the Fund: January 2017

Years of industry experience: 32

(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 fees0.50%
Distribution and service (12b-1) feesnone
Other expenses0.23%
Total annual fund operating expenses0.73%
Fee waivers and expense reimbursements(0.04%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.69%

Institutional Class shares are available only to certain investors.

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 0.69% of the Fund’s average daily net assets from Nov. 28, 2018 through Nov. 28, 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 Floating Rate Fund Quarterly commentary March 31, 2018

Market review

The S&P/LSTA Leveraged Loan Index gained 1.4% in the first quarter of 2018. Lower-rated loans outperformed for the quarter, with CCC-rated loans generating a total return of 2.7% versus 1.5% for B-rated loans and 1.2% for BB-rated loans.

Loan market technicals continued to be strong, as $4.0 billion of retail inflows combined with approximately $32.1 billion of collateralized loan obligation (CLO) issuance, which allowed managers to digest the quarter’s new-issue supply. (Source: LCD, an offering of S&P Global Market Intelligence; S&P Structured Finance Group; J.P. Morgan; Merrill Lynch; and Citigroup for CLO issuance numbers.)

Recent fundamental performance for issuers in the loan market continued to be positive. Fourth-quarter 2017 earnings before interest, taxes, depreciation, and amortization (EBITDA) growth for S&P/LSTA Leveraged Loan Index issuers was 5%, which followed a 5% to 6% gain in the previous two quarters. The S&P/LSTA Leveraged Loan Index default rate increased to 2.4% for the 12-month period ended March 31, 2018, after iHeartMedia filed for Chapter 11 bankruptcy protection. Despite the bankruptcy filing by one of the index’s largest constituents, the index default rate was still inside the historical average of 3.1%.

Within the Fund

Delaware Floating Rate Fund underperformed its benchmark, the S&P/LSTA Leveraged Loan Index, for the first quarter of 2018. The Fund’s performance (Institutional Class shares) placed it in the top 35th percentile of the Fund’s Morningstar peer group, the Morningstar Bank Loan Category.

The Fund’s underperformance for the first quarter was largely due to the Fund’s 9% allocation to high yield bonds. While the -0.3% return for the high yield portion of the Fund outperformed the overall high yield market, the out-of-benchmark allocation to high yield bonds detracted from the Fund’s overall performance. The Fund’s allocation to bank loans, which made up 90% of the Fund, outperformed the benchmark by returning 1.6% for the quarter. Positive performance within loans was broad-based and generally driven by solid earnings commentary from many companies, including Applied Systems Inc., HVSC Merger Sub Corp., Avaya Inc., and Crestwood Holdings LLC.

The Fund ended the year with an average yield-to-worst of approximately 5.5% and an average credit rating of B1/B+.


We expect loan demand to remain positive, supported by a high current income compared to many other parts of fixed income, lower volatility versus high yield and equities, positive credit fundamentals, protection from rising interest rates, and a resilient US economy. By credit quality, we believe B-rated loans offer the best value.

We believe this approach to positioning can allow an investor to carry a competitive yield while somewhat protecting against volatility from economic and political surprises. While good fundamentals and relatively low expected default rates support an overweight to CCC-rated loans, valuations, fundamental growth concerns, and poor liquidity more than offset the higher yields gained from moving far down the credit spectrum.

Past performance is not a guarantee of future results.

The Morningstar Bank Loan Category compares funds that primarily invest in floating-rate bank loans instead of bonds. In exchange for their credit risk, these loans offer high interest payments that typically float above a common short-term benchmark such as the London interbank offered rate, or Libor.

The S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index is a broad index designed to reflect the market-value-weighted performance of US dollar-denominated institutional leveraged loans.

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

[471891] 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.

Effective Jan. 31, 2017, the investment strategies for Delaware Diversified Floating Rate Fund changed and the Fund was repositioned as a bank loan fund. In connection with the repositioning, the Fund’s name changed to Delaware Floating Rate Fund and the benchmark changed to the S&P / LSTA Leveraged Loan Index. These changes may result in a higher portfolio turnover in the near future. For more complete information, please request a prospectus by calling 877 693-3546 800 523-1918 or visiting

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 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

The Fund's investment manager, Delaware Management Company (Manager), may seek investment advice and recommendations from its affiliates: Macquarie Investment Management Europe Limited, Macquarie Investment Management Austria Kapitalanlage AG, and Macquarie Investment Management Global Limited (together, the “Affiliated Sub-Advisors”). The Manager may also permit these Affiliated Sub-Advisors to execute Fund security trades on behalf of the Manager and exercise investment discretion for securities in certain markets where DMC believes it will be beneficial to utilize an Affiliated Sub-Advisor’s specialized market knowledge.

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.

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.

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.

Because the Fund may invest in bank loans and other direct indebtedness, it is subject to the risk that the fund will not receive payment of principal, interest, and other amounts due in connection with these investments, which primarily depend on the financial condition of the borrower and the lending institution.

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 11/15/2019)

Institutional ClassPriceNet change
Max offer price$8.22n/a

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

$130.9 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 10/31/2019)
RatingNo. of funds
3 Yrs5216
5 Yrs3196
Morningstar categoryBank Loan

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 10/31/2019)

YTD ranking4 / 243
1 year3 / 243
3 years12 / 216
5 years126 / 196
10 yearsn/a
Morningstar categoryBank Loan

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 10/31/2019)

YTD ranking4 / 241
1 year3 / 240
3 years12 / 214
5 years123 / 193
10 yearsn/a
Lipper classificationLipper Loan Participation Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

The S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index (view definition)

Morningstar Bank Loan Category (view definition)

Lipper Loan Participation Funds Average (view definition)

Additional information