Delaware REIT Fund


Delaware REIT Fund seeks maximum long-term total return, with capital appreciation as a secondary objective.


The Fund primarily invests in real estate investment trusts (REITs).

Fund information
Inception date11/11/1997
Dividends paid (if any)Quarterly
Capital gains paid (if any)November or 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 (09/30/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-3.45%10.15%9.20%11.70%6.55%9.14%11/11/1997
Average annual total return as of quarter-end (09/30/2015)
Current quarterYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.09%-3.45%10.15%9.20%11.70%6.55%9.14%11/11/1997

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 09/30/2015
Number of holdings52
Market cap (median)$5.93 billion
Market cap (weighted average)$18.20 billion
Portfolio turnover (last fiscal year)83%
P/FFO ratio (view definition)17.79x
Beta (relative to FTSE NAREIT Equity REITs Index) (view definition)0.98
Annualized standard deviation, 3 years (view definition)14.20
Portfolio composition as of 09/30/2015Total may not equal 100% due to rounding.
Domestic equities99.1%
Cash and cash equivalents0.9%
Top 10 holdings as of 09/30/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Simon Property Group Inc.10.4%
Equity Residential5.3%
Public Storage5.1%
General Growth Properties Inc.4.5%
AvalonBay Communities Inc.4.4%
SL Green Realty Corp.3.4%
Essex Property Trust Inc.3.4%
Ventas Inc.3.4%
Welltower Inc.3.4%
Host Hotels & Resorts Inc.3.0%
Total % Portfolio in Top 10 holdings46.3%

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

Top sectors as of 08/31/2015
List excludes cash and cash equivalents.
Sector% of portfolio
Regional malls17.6%
Shopping centers9.5%
Self storage8.4%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
Return of

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 (if any) 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. 

Bob Zenouzi

Bob Zenouzi 

Senior Vice President, Chief Investment Officer — Real Estate Securities and Income Solutions (RESIS)

Start date on the Fund: May 2006

Years of industry experience: 29

(View bio)

Damon Andres

Damon J. Andres, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: January 1997

Years of industry experience: 24

(View bio)

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

The table below 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 fees0.75%
Distribution and service (12b-1) feesnone
Other expenses0.34%
Total annual fund operating expenses1.09%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.09%

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

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Delaware REIT Fund Quarterly commentary June 30, 2015

Within the Fund

For the second quarter of 2015, Delaware REIT Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the FTSE NAREIT Equity REITs Index. Notes on relative performance at the sector level follow:

The mixed sector, by definition, is a varied lot that involves different sectors of the real estate market, with a range of results. Two of the Fund’s holdings in the sector, Duke Realty and PS Business Parks, are owners of industrial, office, and medical office space. Both companies were unable to avoid the real estate investment trust (REIT) selloff even though their fundamentals remained solid. The one outlier in the sector was Digital Realty, a data-storage REIT, which was up 2.41%, outperforming the index by more than 12 percentage points for the quarter. Although the overall demand for data storage is increasing, Digital Realty is in the wholesale segment, which is experiencing flat to declining growth. Digital Realty gained on the anticipation that it will soon enter the retail market with a large accretive acquisition. However, we think growth at any cost will not be rewarded. Given the competition for retail storage assets, we continue to avoid Digital Realty pending more clarity.

In the specialty sector, although Fund holding American Residential Properties, an owner of single-family rentals, gained 2.8% during the quarter, the Fund underperformed due to a lack of a position in Equinix, which gained 9.7%. Equinix is a newly converted REIT that offers data center space, and it has a larger weighting in the index. With its position in the strong retail market for data storage, Equinix currently enjoys high margins. We are concerned, however, that with the anticipation of more entrants coming into the market, those margins could come under pressure.

Most urban and suburban office companies lost value in the second quarter. Although we strongly believe in the Fund’s holdings in the office sector, when industry fund flows are negative, even high-quality companies sell off given their liquidity. We did add to the Fund’s weight in suburban office REITs with the purchase of Brandywine Realty Trust, an owner of office buildings located mostly in the mid-Atlantic region. Brandywine is selling out of noncore markets to focus on developments in Philadelphia. The stock is currently trading at a 22% discount to net asset value, making it one of the cheapest stocks in the REIT universe. We believe the company will either address this discount or a private equity buyer may close that arbitrage. Overall, other holdings in this sector also look attractive to us, including SL Green Realty and Hudson Pacific Properties.

The long lease duration of healthcare REITs led to a decline of 14.2% for the sector compared to 9.95% for the overall market. Early this year, we reduced the Fund’s weighting in the sector, as we believed interest rates had found a bottom at the same time that healthcare REITs were trading at the top of their valuation range. That decision contributed to the Fund’s performance in the second quarter. If rates begin to stabilize, this sector would warrant additional weight. Fundamentally, we think the sector is in good condition, the only caveat being that senior housing has experienced some increased supply, rendering year-over-year comparisons less attractive for senior-housing providers Ventas and Health Care REIT.

Rising interest rates also took a toll on the freestanding sector. Similar to healthcare companies, companies in this sector, also known as triple-net REITs, have long-duration leases that portend slower growth in a rising interest-rate environment. During the quarter, we sold the Fund’s position in Spirit Realty Capital. As Spirit Realty’s cost of capital rises, it becomes more difficult for the company to make accretive acquisitions that would dilute its large exposure to Shopko, a struggling retailer. Conversely, we took advantage of the market selloff and bought one of the premier companies in this sector, National Retail Properties, which has a lower cost of capital and a stronger portfolio than Shopko, in our view.

After a disappointing first quarter, the Fund’s lodging stocks turned in strong relative performance in the second quarter. The sector’s 5.4% decline was just about half that of the overall market. Not only do sectors with shorter duration (such as lodging) tend to outperform as interest rates rise, but the lodging group has strong fundamentals. Host Hotels & Resorts rebounded after posting weak earnings in the first quarter. Given the cheap replacement cost of the stock, we added to the Fund’s position and were rewarded with a modest 0.76% decline.


Our view has always been that volatility in REIT share prices is driven by investor fear and greed in the capital markets rather than real estate fundamentals. Given the contractual nature of leases and the stability of cash flows, one might not expect REITs to be so volatile. However, when an industry is highly leveraged and is required to pay out 90% of its taxable income in dividends, its dependence on capital markets can drive share prices to extremes.

The second quarter of 2015 was the opposite of the fourth quarter of 2014, which saw REITs sell off early before reversing course and heading toward new highs. This time, REITs posted early gains before selling off. With shares prices down approximately 15% from their mid-January peak and down 10% for the quarter overall, we believe now is a good time to add to REIT exposure.

Institutional investors sometimes bypass REITs and invest directly in real estate to avoid volatility and mark-to-market pricing. However, if your time horizon for an investment in real estate is 7–10 years, we believe REITs compare favorably with direct investment. Over a sustained period of time, the volatility in REIT shares declines significantly. We believe that effective corporate governance, higher-quality properties, strong management, lower leverage, and more efficient structure have historically allowed REIT investing to be more profitable than direct real estate investment.

Thank you again for your continued support.


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.

Narrowly focused investments may 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.

A REIT fund's tax status as a regulated investment company could be jeopardized if it holds real estate directly, as a result of defaults, or receives rental income from real estate holdings.

“Nondiversified” funds may allocate more of their net assets to investments in single securities than “diversified” funds. Resulting adverse effects may subject these funds to greater risks and volatility.

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

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 10/02/2015)

Institutional ClassPriceNet changeYTD
Max offer price$14.94n/an/a

Total net assets (as of 09/30/2015)

$221.9 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 08/31/2015)
RatingNo. of funds
3 Yrs3234
5 Yrs3200
10 Yrs3151
Morningstar categoryReal Estate

(View Morningstar disclosure)

Lipper ranking (as of 08/31/2015)

YTD ranking165 / 266
1 year153 / 260
3 years117 / 216
5 years83 / 178
10 years63 / 128
Lipper classificationReal Estate Funds

(View Lipper disclosure)

Benchmark, peer group

FTSE NAREIT Equity REITs Index (view definition)

Lipper Real Estate Funds Average (view definition)

Additional information