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.

Performance as of 30 June 2017

  June 2Q17 1 year 3 year 5 year Since inception(24/12/2007)
Delaware Investments Emerging Markets Fund
(Class F USD (Accumulating) shares, net of fees, in US dollars)
-0.27% 6.62% 29.95% 1.59% 7.14% 1.27%
MCSI Emerging Markets Index
1.01% 6.27% 23.75% 1.07% 3.96% 0.27%

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.

Annualised non-management fees

Portfolio characteristics as of 30 June 2017

Benchmark Index: MSCI Emerging Markets Index (net)

  Fund Index
Weighted average P/E ratio (trailing 12 months) 17.4x 14.3x
Weighted average price/book ratio 1.7x 1.7x
Number of holdings 85 845
Weighted average market capitalisation (millions) $47,819 $42,234
Median market capitalisation (millions) $5,730 $2,735

Top 10 country weightings as of 30 June 2017

  Fund Index
China 30.2% 27.9%
South Korea 16.8% 15.6%
India 12.5% 8.8%
Brazil 11.9% 6.6%
Russia 6.8% 3.2%
Mexico 6.0% 3.7%
Taiwan 5.5% 12.5%
Turkey 2.7% 1.2%
United States 1.6% 0.0%
Chile 1.5% 1.1%

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.

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: 21

(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.

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.

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.

There are risks involved with investing in the Fund, including loss of principal.

Non-U.S. investments are subject to risks not ordinarily associated with U.S. investments, such as currency, economic and political risks, and different accounting standards.

Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Current tax levels and relief may change. Depending on individual circumstances, this may affect investment returns.

Diversification may not protect against market risk.

Fund finder

Daily pricing (as of 20/07/2017)

ClassPriceNet changeYTD
F USD (Acc.)$11.99-0.0230.47%
I USD (Acc.)$14.39-0.0230.94%
I GBP (Acc.)$15.090.0424.51%
I EUR (Acc.)$13.56-0.1518.64%

Class F$*


Currency USD
Sedol B29Q7R8
CUSIP G2774C106
Bloomberg ID DLEMFUA

Fees and expenses

Management fee 1.70%
Expense ratio 2.20%


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