Delaware Investments Emerging Markets Fund

Investment objective

The investment objective of Delaware Investments Emerging Markets Fund (Fund) is to aim to achieve long-term capital appreciation. The focus of the Fund’s investments is on a broad range of equity securities (shares and other similar instruments) of companies located in emerging market countries. At least 80% of the assets of the Fund will normally be invested in such investments.


We believe that although market price and intrinsic business value are positively correlated in the long run, short-term divergences can emerge. We seek to take advantage of these divergences through our disciplined, fundamental, bottom-up approach. We invest in companies with, in our view, sustainable franchises when they are trading at a significant discount to our conservative intrinsic value estimate.

Investment process

Step 1. Idea generation

We seek to invest in sustainable franchises – companies with high potential to earn returns above their cost of capital over the long-run. These are companies whose high quality franchises exhibit characteristics such as identifiable competitive advantages, businesses with high entry barriers, or high replication costs. We prefer companies that have large market opportunities in which to deploy capital, ensuring that they grow faster than the overall economy. We only invest in a particular company after in-depth analysis of the structural determinants of an industry’s and a company’s future returns.

Step 2. Fundamental research

Fundamental bottom-up research is the core of our investment process. The investment team’s fundamental research process can be broken down into two main components: analysing a company’s sustainability and assessing its intrinsic value. Sustainability analysis involves identification of a company’s source of competitive advantage and the ability of its management to maximise its return potential. Intrinsic value assessment is typically quantitatively driven by various valuation methods including discounted cash flow, replacement cost, private market transaction, and multiples analyses. This bottom-up approach considers current and historical macro drivers that may impact a firm’s ability to generate returns over the long-term.

Sustainable franchise analysis

Once an idea emerges from our idea sourcing work, fundamental research is conducted emphasising the long-term determinants of a company’s returns and growth. We perform significant documentary research and industry research to assess the quality of a company’s franchise and/or assets, competitive dynamics, and management quality. We prefer companies whose products and services enjoy secular growth opportunities. For those companies whose value is mostly tangible, we focus on the quality and quantity of assets and the speed with which management can extract additional value from performing assets and realise adequate value for non-performing ones from restructuring or disposals. We incorporate our top-down country and economic views into our bottom-up analysis. While these views drive our stock selection on extreme occasions, they typically serve as an input into our fundamental research.

Intrinsic value assessment

Intrinsic value assessment plays a crucial role in our investment process. In order to come to what we believe to be a company’s intrinsic value, we choose one or more appropriate valuation methods based on the fundamentals of the business. We review a company’s valuation history across a range of valuation measures, construct a discounted cash flow (DCF) model using our own assumptions, and perform break-up and/or sum-of-the-parts analyses to estimate value. A final valuation range is determined through a combination of DCF values, comparative multiple analysis, and asset value. We are generally looking for a minimum discount to a conservative intrinsic value estimate of 25%.

Step 3. Portfolio construction and risk management

Portfolios are diversified across regions, countries and sectors; however, allocation decisions are primarily driven by bottom-up company analysis. We follow established guidelines in order to ensure proper diversification. For countries or sectors representing more than 15% of the MSCI Emerging Markets Index (“Index”), the Fund’s portfolio weighting should be approximately 50%-150% of the Index weighting. For sectors with Index weightings between 5% and 15%, the Fund can invest in a range from 0%-200% of the Index weight.

Portfolio risk is continuously managed through a combination of portfolio construction techniques as well as fundamental/valuation risk assessment of individual holdings. We are thorough when conducting fundamental research and by creating a diversified portfolio of stocks trading at significant discounts to intrinsic value, we believe our strategy produces a relatively lower risk, lower volatility portfolio. Scenario analysis and stress testing are conducted as part of our bottom-up research. We monitor portfolio risk metrics and portfolio constraints on a regular basis.

Step 4. Sell discipline

Holdings are typically sold for the following reasons: 

  • Valuation – stock price attains our fair value estimate 
  • Negative change in fundamentals – unexpected deterioration in country or company fundamentals that significantly reduces our fair value estimate 
  • More attractive alternatives 

We view fundamental research as a dynamic process. We are constantly collecting data and reevaluating our companies in order to properly implement our sell discipline.

Class F USD (Accumulating) shares, net of fees, in US dollars

Performance as of 30 November 2019

  November1 YTD1 1 year 3 year 5 year 10 year Since inception(24/12/2007)
Delaware Investments Emerging Markets Fund
(Class F USD (Accumulating) shares, net of fees, in US dollars)
1.10% 13.09% 8.33% 11.68% 4.82% 4.11% 2.14%
MCSI Emerging Markets Index (net)
-0.14% 10.20% 7.28% 9.01% 3.12% 3.33% 0.95%

Class I USD (Accumulating) shares, net of fees, in US dollars

Performance as of 30 November 2019

  November1 YTD1 1 year 3 year 5 year 10 year Since inception(21/10/2009)
Delaware Investments Emerging Markets Fund
(Class I USD (Accumulating) shares, net of fees, in US dollars)
1.16% 13.91% 9.09% 12.50% 5.60% 4.89% 4.58%
MCSI Emerging Markets Index (net)
-0.14% 10.20% 7.28% 9.01% 3.12% 3.33% 3.14%

1. Returns for less than one year are not annualized.

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

The MSCI Emerging Markets Index (net) measures equity market performance across emerging market countries world-wide. Index "net" return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate. It is an unmanaged index and a theoretical measure of stock market performance rather than an actual available investment. You cannot invest directly in an index.

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

Annualised non-management fees

Portfolio characteristics as of 30 November 2019

Benchmark Index: MSCI Emerging Markets Index (net)

  Fund Index
Weighted average P/E ratio (trailing 12 months) 13.3x 12.1x
Weighted average price/book ratio 1.7x 1.8x
Number of holdings 90 1,202
Weighted average market capitalisation (billions) $78.9 $60.2
Median market capitalisation (billions) $6.3 $1.6

Top 10 country weightings as of 30 November 2019

  Fund Index
China 31.6 34.0
South Korea 17.7 11.6
Brazil 12.3 7.1
Taiwan 9.7 11.7
India 9.7 9.1
Russia 7.6 3.9
Mexico 4.6 2.3
Turkey 1.2 0.5
Peru 0.9 0.4
Chile 0.8 4.6

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure equity market performance across emerging market countries worldwide. Index “net” return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate.

Liu-Er Chen

Liu-Er Chen, CFA

Senior Vice President, Chief Investment Officer — Emerging Markets and Healthcare

Start date on the Fund: December 2007

Years of industry experience: 24

(View bio)

Portfolio holdings are as of the date noted above and are subject to change at any time. Holdings may not be representative of current or future investments and may not include the entire investment portfolio. Holdings information is made available to the public 30 calendar days after the most recent month-end for monthly holdings and 30 calendar days after the most recent quarter-end for quarterly holdings.

Holdings data is for informational purposes only, and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any specific security. By accessing the portfolio holdings, you agree not to reproduce, distribute or disseminate the portfolio holdings, in whole or part. In no event shall the Macquarie Collective Funds plc or its affiliates have any liability relating to the use of the portfolio holdings.

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

Investors should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and Key Investor Information Documents (KIIDs) contain this and other important information about the Fund. You can request a prospectus, fund supplement, and/or KIID free of charge by calling +353-1-483-2429, visiting or by contacting your applicable local agent. Investors should read the prospectus, fund and country supplements (if applicable), and KIIDs carefully before investing or sending money.

Investing involves risk, including the possible loss of principal.

Fixed income securities and bond investments 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.

Each Fund is exposed to the risk that a counterparty will not settle a transaction due to a credit or liquidity problem. In the case of a default, the Fund could be subject to adverse market movements while replacement transactions are executed. This may be accentuated for contracts with longer maturities, or where there are concentrated transactions with a small group of counterparties.

Interest rates are determined by factors of supply and demand in the international money markets which are influenced by macro economic factors, speculation and central bank and government intervention. Fluctuations in short-term and/or long-term interest rates may affect the value of the Shares. Fluctuations in interest rates of the currency in which the Shares are denominated and/or fluctuations in interest rates of the currency or currencies in which a Fund’s assets are denominated may affect the value of the Shares.

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.

Supranational Organisations are entities designated or supported by governments or governmental entities to promote economic development, and include the Asian Development Bank, the European Community, the European Investment Bank, the Inter-American Development Bank, the International Monetary Fund, the United Nations, the International Bank for Reconstruction and Development (“World Bank”), and the European Bank for Reconstruction and Development. These organisations have no taxing authority and are dependent upon their members for payments of interest and principal. The lending activities of such supra-national entities are limited to a percentage of their total capital (including “callable capital”) contributed by members at an entity’s call, reserves, and net income.

The Funds that invest in debt securities and hold active currency positions may be exposed to currency exchange risk. Currency exchange rates may fluctuate over short periods of time. A Fund may engage in non-U.S. currency transactions in order to hedge against currency fluctuations. Hedging transactions, while potentially reducing the currency risks to which the Fund would otherwise be exposed, involve certain other risks, including the risk of a default by a counterparty.

Non-publicly traded and Rule 144A Securities may involve a high degree of business and financial risk and may result in substantial losses. These securities may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realised from these sales could be less than those originally paid by a Fund.

Prices of derivatives may move in unexpected ways. Some derivatives are “leveraged” and may magnify or otherwise increase investment losses. A liquid secondary market may not always exist for the Funds’ derivatives positions and may not be able to be “closed out” when desired. Derivatives involve legal risk, the risk of loss due to the unexpected application of a law or regulation, or because contracts are not legally enforceable or documented correctly.

Trading in options can cause the Fund’s Net Asset Value to experience more frequent and wider fluctuations than if the Fund did not utilise options. No assurance can be given that the Funds will be able to effect closing transactions at a time when they wish to do so. The Fund may be required to hold assets that it would otherwise have sold and continue to be at market risk on such assets encurring higher transaction costs. Options that are not exchange traded will subject a Fund to risks relating to its counterparty, such as the counterparty’s bankruptcy, insolvency, or refusal to honour its contractual obligations.

Zero coupon bonds and payment-in-kind (PIK) bonds are considered to be more interest rate-sensitive and more speculative than interest-bearing bonds and may subject the Fund to adverse conditions under certain circumstances.

Companies involved in Initial Public Offerings generally have limited operating histories, and prospects for future profitability are uncertain. Prices of IPOs may also be unstable because of the absence of a prior public market, the small number of shares available for trading, and limited investor information. IPOs will frequently be sold within 12 months of purchase.

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

In the event of bankruptcy or other default of a borrower of portfolio securities, a Fund could experience both delays in liquidating the loan collateral or recovering the loaned securities. Possible losses include (a) decline in the value of the collateral or in the value of the securities loaned during the period which the Fund seeks to enforce its rights thereto, (b) sub-normal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights.

Fund finder

Daily pricing (as of 21/01/2020)

ClassPriceNet changeYTD
F USD (Acc.)$14.17-0.202.02%
I USD (Acc.)$17.33-0.242.06%
I GBP (Acc.)$18.07-0.293.67%
I EUR (Acc.)$17.13-0.223.32%

Class F$*


Currency USD
Sedol B29Q7R8
CUSIP G2774C106
Bloomberg ID DLEMFUA

Class I$*


Currency USD
Sedol B29Q7W3
CUSIP G2774C791
Bloomberg ID DLEMFUI

Class F USD (Acc.)
Fees and expenses

Management fee 1.70%
Expense ratio 2.20%

Class I USD (Acc.)
Fees and expenses

Management fee 0.95%
Expense ratio 1.45%


Fund documents

Visit our Literature page for Key Investor Information Documents (KIIDs).

* For information on other share classes, please contact Delaware Investments at +1 215 255-1505 or at