Delaware Corporate Bond Fund


Delaware Corporate Bond Fund seeks to provide investors with total return.


The Fund primarily invests in corporate bonds, with a focus on bonds that have investment grade credit ratings. The Fund seeks total return through a combination of income and capital appreciation.

Fund information
Inception date09/15/1998
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

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

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Average annual total return as of month-end (08/31/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)8.58%11.68%8.25%9.68%7.51%7.64%09/15/1998
Barclays U.S. Corporate Investment Grade Index7.14%9.09%5.79%7.09%5.71%n/a
Average annual total return as of quarter-end (06/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.60%7.44%9.92%8.37%11.16%7.82%7.65%09/15/1998
Barclays U.S. Corporate Investment Grade Index2.66%5.68%7.73%6.21%8.10%5.94%n/a

Returns for less than one year are not annualized.

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

Expense ratio
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

Portfolio characteristics - as of 08/31/2014
Share assets$507.8 million
Number of holdings230
Effective maturity (weighted average) (view definition)10.95 years
Effective duration (weighted average) (view definition)6.96 years
Annualized standard deviation, 3 years (view definition)4.64
SEC 30-day yield with waiver (view definition)3.55%
SEC 30-day yield without waiver (view definition)3.54%
Portfolio turnover (last fiscal year)230%
Portfolio composition as of 08/31/2014Total may not equal 100% due to rounding.
Asset-backed securities3.4%
U.S. government securities1.8%
Municipal bonds0.8%
Top 10 holdings as of 08/31/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Pennsylvania Electric Co. 5.200 4/1/20201.5%
Verizon Communications Inc. 5.150 9/15/20231.3%
Santander UK PLC 5.000 11/7/20231.1%
Bank of America Corp. 4.200 8/26/20241.1%
Monsanto Co. 4.400 7/15/20441.0%
Electricite de France S.A. 5.250 12/29/20491.0%
EnLink Midstream Partners LP 4.400 4/1/20241.0%
Broadcom Corp. 3.500 8/1/20240.9%
Georgia-Pacific LLC 8.000 1/15/20240.9%
Telefonica Emisiones SAU 4.570 4/27/20230.9%
Total % Portfolio in Top 10 holdings10.7%

Holdings are as of the date indicated and subject to change.

Top sectors as of 08/31/2014
List excludes cash and cash equivalents.
Sector% of portfolio
Financial institutions23.8%
Basic Industry7.7%
Consumer cyclical6.5%
Consumer noncyclical3.1%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment

1If a Fund makes a distribution from any source other than net income, it is required to provide shareholders with a notice disclosing the source of such distribution (each a "Notice"). The amounts and sources of distributions reported above and in each Notice are only estimates and are not provided for tax reporting purposes. Each Fund will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Fund's distributions for federal income tax purposes. The information in the table above will not be updated to reflect any subsequent recharacterization of dividends and distributions. Click here to see recent Notices pertaining to the Fund (if any).

2Information on return of capital distributions is only provided from June 1, 2014 onward.

3Includes both short- and long-term capital gains.

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

Thomas Chow

Thomas H. Chow, CFA

Senior Vice President, Chief Investment Officer — Corporate Credit

Start date on the Fund: May 2007

Years of industry experience: 26

(View bio)

Roger Early

Roger Early, CPA, CFA, CFP

Senior Vice President, Co-Chief Investment Officer — Total Return Fixed Income Strategy

Start date on the Fund: May 2007

Years of industry experience: 38

(View bio)

Paul Matlack

Paul Matlack, CFA

Senior Vice President, Senior Portfolio Manager, Fixed Income Strategist

Start date on the Fund: December 2012

Years of industry experience: 29

(View bio)

Craig Dembeck

Craig C. Dembek, CFA

Senior Vice President, Co-Head of Credit Research, Senior Research Analyst

Start date on the Fund: December 2012

Years of industry experience: 20

(View bio)

John McCarthy

John P. McCarthy, CFA

Senior Vice President, Co-Head of Credit Research, Senior Research Analyst

Start date on the Fund: December 2012

Years of industry experience: 27

(View bio)

Image not available

Kashif Ishaq 

Head of Investment Grade Corporate Bond Trading

Start date on the Fund: November 2013

Years of industry experience: 12

(View bio)

Christopher Testa

Christopher M. Testa, CFA

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: June 2014

Years of industry experience: 28

(View bio)

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering pricenone
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.47%
Distribution and service (12b-1) feesnone
Other expenses0.21%
Total annual fund operating expenses0.68%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.68%

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

1The Fund's investment manager, Delaware Management Company (Manager), is contractually waiving its investment advisory fees and/or paying expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) to the extent necessary to prevent total annual fund operating expenses from exceeding 0.69% of the Fund's average daily net assets from Nov. 27, 2013 through Nov. 28, 2014. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

View printable commentary E-mail this page

This commentary is currently not available. Please check back later.

Delaware Corporate Bond Fund Quarterly commentary June 30, 2014 Class A (DGCAX)


Though geopolitical noise remained elevated during the quarter, the reaction of credit markets was muted as easy monetary policy and improving global growth trumped the outlook for risk.

Investment grade corporate bonds returned 2.66% for the quarter, led by the cable/satellite, metals/mining, and paper sectors. Senior bank debt was among the worst performers as heavy supply weighed on the sector. Airlines and construction machinery also lagged. Spreads on the Barclays U.S. Corporate Investment Grade Index tightened from 1.06 to 0.99 percentage points during the quarter, ending at the pre-crisis levels of mid-2007. BBB-rated credits fared the best across the quality spectrum. (Source: Barclays Credit Research.)

Supply remained robust, with $309 billion in new issuance during the quarter, bringing the year-to-date total to $620 billion (source: Bank of America). This figure is well ahead of last year’s pace amid a relentless demand for fixed income. Full-year forecasts still call for a reduction in supply; however, interest rates, mergers-and-acquisitions activity, share buybacks, and financial supply are all wildcards that could influence ultimate supply levels. New-issue concessions are averaging approximately 0.06 percentage points.

Technical conditions remain in good shape with solid flow activity and strong demand for investment grade debt. Fund flows for the quarter were positive at $13.6 billion (source: UBS). Investment grade markets have been a relative safe haven from global volatility, particularly recent emerging market turmoil. Fundamentals are satisfactory as the growth in debt continues to be offset by strong coverage metrics, with issuers rolling debt at historically low yields, though revenue growth is still lagging nominal GDP. Cheap-and-easy financing has fueled a surge in M&A activity, although most deals have been credit-friendly to date.

Within the Fund

For the second quarter of 2014, Delaware Corporate Bond Fund (Class A shares at net asset value) generated a positive total return and outperformed its benchmark, the Barclays U.S. Corporate Investment Grade Index.

The high yield bond market was among the strongest sources of performance during the quarter, although the Fund’s investments in bank loans produced more-moderate positive results. The Fund’s positions in emerging market debt also had a positive impact on relative performance for the quarter. U.S. dollar–based issues were the primary source of that outperformance, while corporate issues experienced spread tightening.

Meanwhile, non-dollar developed markets, while representing only a small allocation of Fund assets, nonetheless produced solid returns during the quarter as interest rate exposures benefited performance. Currency hedging had a modest positive effect as well.


The M&A theme for 2014 remains in full swing, although, to date, the phenomenon has been credit-friendly and limited to large and cash-rich companies that have plenty of debt capacity. For example, AT&T recently offered to buy DirecTV for $48.5 billion, gaining more than 38 million video subscribers at home and in Latin America.

Another increasingly popular motivation for merger activity has been tax-related. M&A for the purpose of tax inversion has been on the rise, especially among U.S. corporations as the United States has the highest tax rates in the developed world. By reincorporating in a lower tax jurisdiction, companies have been lowering their cash taxes, increasing free cash flow generation, and putting to use large stockpiles of cash held offshore. Some recent examples include Medtronic, the second-largest maker of medical devices, which agreed to buy Covidien for $42.9 billion in cash and stock. The combined company will be based in Ireland for tax purposes and would free almost $14 billion in cash Medtronic now holds overseas.

Elsewhere, AbbVie has approached Shire with a merger proposal offer for $45.7 billion (44% cash and 56% equity). Shire has been mentioned as a tax-inversion partner for several companies recently. Looking forward, investors will be watching for signs of more aggressive deal making, growth prospects in Europe and China, and geopolitical/contagion risk.

M&A: A general term used to refer to the consolidation of companies.

Bond ratings are determined by a nationally recognized statistical rating organization (NRSRO).

Per Standard & Poor’s credit rating agency, bonds rated below AAA are more susceptible to the adverse effects of changes in circumstances and economic conditions than those in higher-rated categories, but the obligor’s capacity to meet its financial commitment on the obligation is still strong. Bonds rated BBB exhibit adequate protection parameters, although adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics with BB indicating the least degree of speculation.


The views expressed represent the Manager's assessment of the Fund and market environment as of the date indicated, 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. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

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 clicking the prospectus link located in the right-hand sidebar or calling 800 362-7500. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

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.

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.

High yielding, noninvestment grade bonds (junk bonds) involve higher risk than investment grade bonds.

The Fund 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 are distributed by Delaware Distributors L.P., an affiliate of Delaware Management Holdings, Inc., and Macquarie Group Limited.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 09/30/2014)

Institutional ClassPriceNet changeYTD
NAV$6.03no chg6.83%
Max offer price$6.03n/an/a

Total net assets (as of 08/31/2014)

$1.2 billion all share classes

Lipper ranking (as of 08/31/2014)

YTD ranking26 / 197
1 year34 / 196
3 years14 / 162
5 years10 / 137
10 years9 / 93
Lipper classificationCorp Debt BBB Rated Fds

(View Lipper disclosure)

Benchmark, peer group

Barclays U.S. Corporate Investment Grade Index (view)

Lipper Corporate Debt Funds BBB-Rated Average (view)

Additional information