The hand value could play in long-term growth

Investors commonly expect growth companies to provide the greatest long-term capital appreciation in their portfolios and expect value companies to provide capital protection, with appreciation. However, as noted in the chart below, our long-term analysis of the major US stock market indices shows that the Russell 2000® Value Index historically has provided the greatest long-term capital appreciation, with a cumulative return of 337% for the period from May 31, 2000 to May 31, 2020, outperforming the Russell 2000® Growth Index's return of 208% and the S&P 500® Index’s return of 217%.

Long-term capital appreciation

Source: Morningstar. Time period shown is May 31, 2000 to May 31, 2020.

Past performance does not guarantee future results.

Charts shown throughout are for illustrative purposes only and not meant to predict actual results.

Chart is for illustrative purposes and is not representative of the performance of any specific investment.

What this means for investors

The search for investment growth remains a central, critical goal for today's investors, but finding a reliable source to fuel portfolio growth can be a challenge, in our opinion. We believe there is a potential opportunity for the small-cap value asset class to provide that solution.


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IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

The views expressed represent the Manager's assessment of the market environment as of June 2020, 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. Views are subject to change without notice and may not reflect the Manager's views.

Value investing focuses on buying stocks that are trading at bargain prices based on fundamental analysis, then holding them until they become fully valued.

Typically, value investors select securities with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.

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

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 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.

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.

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

Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. Investment products and advisory services are distributed and offered by and referred through affiliates which include Delaware Distributors, L.P., a registered broker/dealer and member of the Financial Industry Regulatory Authority (FINRA) and Macquarie Investment Management Business Trust (MIMBT), a Securities and Exchange Commission (SEC)-registered investment advisor. Investment advisory services are provided by a series of MIMBT. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide. Delaware Funds by Macquarie refers to certain investment solutions that MIM distributes, offers, refers, or advises.

Other than Macquarie Bank Limited (MBL), none of the entities noted in this presentation are authorised deposit taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise.

Nothing presented should be construed as a recommendation to purchase or sell any security or follow any investment technique or strategy.