Delaware Investments Global Real Estate Securities Fund

 

Philosophy

We believe that potentially superior investments in the global real estate investment trust (REIT) market can best be identified through a combination of top-down country investment decisions and a "dual bottom-up" approach to fundamental research. That is, our analysis encompasses both the property level and the security level.

Further, we work toward constructing a portfolio that represents what we believe to be the best relative values in the marketplace and emphasizes companies that have historically had what we believe to be the most potential for cash flow growth. This is our strategy for seeking consistent excess returns at moderate levels for our clients over the long-term. We avoid extreme market valuations in order to emphasize this potential for predictable cash flow growth.

Finding opportunities may begin with an extensive search of our proprietary database, using carefully defined and tested parameters that pinpoint REIT securities fitting specific criteria. Or, the search may begin with a portfolio manager's routine study of articles in the trade press, a conversation with a fellow member of a professional association, or any of the numerous interactions between our team and others in our industry or involved with REIT markets.

The experienced team is led by Bob Zenouzi, who has 21 years of experience in investing and finance.

Investment process

Step 1. Valuation screens

We analyze numerous real estate investment trusts and real estate operating companies to create a focused universe of potential investments. In doing this, we focus on valuation history for both the company and sector. We also rank REIT stocks by their ratio of price to net asset value or NAV (also called liquidating value; in this instance, NAV represents the value for which a REIT's physical assets could be sold), relative multiples, and implied cap rates (a property's net operating income divided by its purchase price).

After assessing the availability of data about the security and its liquidity, we focus on the best candidates based on relative valuation.

Step 2. Fundamental research

Our team conducts fundamental, in-depth research. Security analysis focuses on funds from operations (FFO) and average funds from operations (AFFO) projections, spread investing, the securities' capital structure, and the overall sum of the company's parts. Additional analysis focuses on property-level metrics, with an eye also to private-market cap rates, on-site property assessments, and regional considerations.

We assess each company qualitatively through management interviews, information about the company's human capital, an evaluation of corporate governance, and the company's long-term strategic goals.

Step 3. Portfolio construction

Managing risk for the portfolio means keeping it diversified as to sectors and geography. Generally, we seek to incorporate:

  • Maximum stock weighting of the greater of 5% or 250 basis points above the The FTSE EPRA/NAREIT Developed Index.
  • A country weighting ranging from 50% of the index weighting to 150% over the index weighting. If country index weight is less than 10%, no weight restrictions.
  • Well-diversified holdings across sectors and countries/regions.
  • Fully invested holdings.

Step 4. Sell discipline

Factors that lead to a sell decision include whether a holding reaches our target price range, has better opportunities in relative pricing, or is experiencing a decline in fundamentals. For example, a decline might be an asset yield that drifts below the cost of capital or deterioration in the quality of cash flow. At such a point, we would seek better investment opportunities.

Performance as of 31 August 2011

  3Q 2011 1 year 3 year Since inception(24/12/2007)
Delaware Investments Global Real Estate Securities Fund(Class F shares, net of fees, in U.S. dollars) 0.50% 13.27% -0.45% -5.52%
FTSE EPRA/NAREIT Developed Index 0.14% 15.49% 0.76% -3.80%

The performance data quoted represent past performance; past performance may not be a reliable guide to future performance and 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 FTSE EPRA/NAREIT Developed Index, formerly referred to as the the FTSE EPRA/NAREIT Global Real Estate Index, tracks the performance of listed real estate companies and real estate investment trusts (REITs) worldwide, based in U.S. dollars.

Portfolio characteristics as of 31 August 2011

Benchmark Index: The FTSE EPRA/NAREIT Developed Index

  Fund Index
Weighted average price/cash flow ratio 16.1x 14.9x
Weighted average dividend yield 3.5% 3.8%
Number of holdings 89 288
Weighted average market capitalization (millions) $10,504 $10,653
Median market capitalization (millions) $3,914 $2,340

Top 10 country weightings (Fund vs. Index) as of 31 August 2011

  Fund Index
United States 43.5% 43.1%
Hong Kong 10.5% 10.7%
Australia 8.5% 9.5%
Japan 7.6% 8.1%
United Kingdom 5.6% 6.0%
Canada 4.7% 4.8%
Singapore 4.0% 4.4%
France 2.2% 4.1%
China 1.5% 1.0%
Belgium 0.9% 2.9%

The FTSE EPRA/NAREIT Developed Index, formerly referred to as the the FTSE EPRA/NAREIT Global Real Estate Index, tracks the performance of listed real estate companies and real estate investment trusts (REITs) worldwide, based in U.S. dollars.

Babak (Bob) Zenouzi

Babak "Bob" Zenouzi Senior Vice President, Chief Investment Officer – Real Estate Securities and Income Solutions (RESIS)

Bob Zenouzi is the lead manager for the real estate securities and income solutions (RESIS) group at Delaware Investments, which includes the team, its process, and its institutional and retail products, which he created during his prior time with the firm. He also focuses on opportunities in Japan, Singapore, and Malaysia for the firm’s global REIT product. Additionally, he serves as lead portfolio manager for the firm’s Dividend Income products, which he helped to create in the 1990s. He is also a member of the firm’s asset allocation committee, which is responsible for building and managing multi-asset class portfolios. He rejoined Delaware Investments in May 2006 as senior portfolio manager and head of real estate securities. In his first term with the firm, he spent seven years as an analyst and portfolio manager, leaving in 1999 to work at Chartwell Investment Partners, where from 1999 to 2006 he was a partner and senior portfolio manager on Chartwell’s Small-Cap Value portfolio. He began his career with The Boston Company, where he held several positions in accounting and financial analysis. Zenouzi earned a master’s degree in finance from Boston College and a bachelor’s degree from Babson College. He is a member of the National Association of Real Estate Investment Trusts and the Urban Land Institute.

Damon J. Andres

Damon J. Andres, CFA Vice President, Senior Portfolio Manager

Damon J. Andres, who joined Delaware Investments in 1994 as an analyst, currently serves as a portfolio manager for the firm’s real estate securities and income solutions (RESIS) group. He also serves as a portfolio manager for the firm’s Dividend Income products. From 1991 to 1994, he performed investment-consulting services as a consulting associate with Cambridge Associates. Andres earned a bachelor’s degree in business administration with an emphasis in finance and accounting from the University of Richmond.

  • Monthly holdings as of 30 November 2011
  • Quarterly holdings as of 30 September 2011

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.

Investors should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus contains this and other important information about the Fund and can be obtained by clicking here or calling 1+353-1-483-2429. Investors should read the prospectus carefully before investing or sending money.

There are risks involved with investing in Undertakings for Collective Investments in Transferable Securities (UCITS), including loss of principal.

Narrowly focused investments typically 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.

International investments are subject to risks not ordinarily associated with U.S. investments, including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.

The value of investments and any income will fluctuate 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. Changes in exchange rates may have an adverse effect on the value, price or income of the product.

Fund finder

Class F$

(Accumulating)

Currency USD
ISIN IE00B29QKG89
Sedol B29QKG8
CUSIP G2774C114
Bloomberg ID DREITFU

Fees and expenses

Management fee 1.40%
Expense ratio 1.85%

Prospectuses and reports