Delaware Investments Delaware Investments Delaware Investments

Taxable fixed income team

Taxable fixed income team

Team size is a sweet spot

Roger Early

Roger Early, co-chief investment officer of total return strategy for the taxable fixed income group at Delaware Investments, comments on his team’s size as inhabiting an excellent place for fixed income investors. Run time (0:50)

The views expressed represent the Manager’s assessment of the Fund and market environment as of September 2012, 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.

Investment philosophy

Investment philosophy

Our investment process in managing taxable fixed income securities is underpinned by a belief that the fixed income markets are efficient with respect to interest rate risk, but that bond markets regularly misprice securities that are exposed to credit, prepayment, liquidity, and currency risks.

In our view, focusing on individual security selection within a duration‑neutral portfolio is the most effective strategy to exploit these inefficiencies.

Investment team — senior leaders

See Yeng Quek

See Yeng Quek, CFA

Managing Director, Head of Fixed Income Investments

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Roger Early on how the three arms of the taxable fixed income group work together to generate investment ideas. Run time (0:36)

The views expressed represent the Manager’s assessment of the Fund and market environment as of September 2012, 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.

Roger Early

Roger A. Early, CPA, CFA

Co-Chief Investment Officer – Total Return Fixed Income Strategy

(View bio)

Paul Grillo

Paul Grillo, CFA

Co-Chief Investment Officer – Total Return Fixed Income Strategy

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Video: What differentiates our team
Investment philosophy: Active management

Investment philosophy: Active management

We manage money using a bond-by-bond approach to credit selection, and we have a history of managing customized portfolios.

Because we manage more than $125 billion in fixed income assets, we are generally able to garner broad-market senior coverage from top sell-side firms in the industry.

Our size also helps support a deep team, which includes more than 80 fixed income investment professionals.*

* as of June 30, 2012

Investment philosophy
Distinguishing characteristics

Distinguishing characteristics

Our passion for performance runs through everything we do. We believe that our team has a distinct combination of characteristics that help differentiate us from our competitors.

  • Flat organizational structure: We have a true team approach — investment ideas are generated by portfolio managers, traders, and research analysts. This structure allows team members at all levels to contribute and debate new investment ideas, and share key information.
  • Extensive resources: Our investment process is primarily bottom-up, constructing portfolios bond by bond. Importantly, we have significant resources dedicated to our portfolio construction process. Each of our research analysts reviews credits with a specialist focus on a specific sector of the market across the ratings and capitalization curve.
  • Transparent investment process: We believe our investment approach is easily understood, repeatable, and transparent. This provides clients with clarity as to how we seek to generate investment returns.
  • Differentiation from competitors: Our style emphasizes issue selection instead of interest rate anticipation or yield-curve management, potentially complementing or offsetting higher-beta (or riskier) approaches employed by other fixed income managers.
  • Flexible decision making: Most of our decisions are executed on the trading desk as research analysts, traders, and portfolio managers collaborate. This decision-making process strips away bureaucracy, offering team members input in all investment decisions.
  • Strong risk controls: In using our proprietary risk management system to evaluate and monitor portfolio risk characteristics, we assess the effects of adding a security (and the offsetting security to be sold) to a particular sector and duration bucket.
Video: Active management
Funds we manage

Funds we manage:

Taxable funds risk

The risk analysis shown above has been prepared by Delaware Investments. When assessing the degree of risk Delaware Investments considers qualitative and quantitative factors including a Fund’s portfolio holdings, diversification permitted within a Fund’s prospectus, a Fund’s standard deviation (a measure of variability of a Fund’s expected returns), R-squared (a measure of how much of a Fund’s past returns can be explained by the returns from its benchmark index), and beta (the measure of a Fund’s systemic risk) analysis. There is no guarantee that any one Fund will be less volatile than any other. This order is subject to change.

Distinguishing characteristics
What differentiates our team

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 visiting our fund literature page or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

IMPORTANT RISK CONSIDERATIONS

Fixed income securities may also be subject to prepayment risk, the risk that the principal of a fixed income security may be prepaid prior to maturity, potentially forcing the investor to reinvest that money at a lower interest rate. Securities in the lowest of the rating categories considered to be investment grade (that is, Baa or BBB) have some speculative characteristics.

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.

Securities in the lowest of the rating categories considered to be investment grade (that is, Baa or BBB) have some speculative characteristics.

The Funds 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 derivative transaction depends upon the counterparties’ ability to fulfill their contractual obligations.

The Funds may invest in bank loans and other direct indebtedness, and therefore are subject to the risk that they 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.

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 fixed income security that is held by the Fund may be prepaid prior to maturity, potentially forcing the Fund to reinvest that money at a lower interest rate.

Interest payments on inflation-indexed debt securities will vary as the principal and/or interest is adjusted for inflation.

If and when the Fund invests in forward foreign currency contracts or uses other investments to hedge against currency risks, the Fund will be subject to special risks, including counterparty risk.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in them.

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

Diversification may not protect against market risk.

A bottom-up approach to investing primarily considers factors affecting individual companies and secondarily focuses on industries and economic trends.