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 (02/28/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)2.98%22.23%14.55%17.41%8.48%9.87%11/11/1997
FTSE NAREIT Equity REITs Index2.99%22.56%15.45%17.61%9.25%n/a
Average annual total return as of quarter-end (12/31/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)14.09%29.20%29.20%15.40%16.51%7.56%9.78%11/11/1997
FTSE NAREIT Equity REITs Index14.20%30.14%30.14%16.33%16.88%8.31%n/a

Returns for less than one year are not annualized.

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 02/28/2015
Number of holdings46
Market cap (median)$4.81 billion
Market cap (weighted average)$19.66 billion
Portfolio turnover (last fiscal year)83%
P/FFO ratio (view definition)19.78x
Beta (relative to FTSE NAREIT Equity REITs Index) (view definition)0.97
Annualized standard deviation, 3 years (view definition)13.20
Portfolio composition as of 02/28/2015Total may not equal 100% due to rounding.
Domestic equities97.5%
Cash and cash equivalents2.5%
Top 10 holdings as of 02/28/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Simon Property Group Inc.10.7%
Equity Residential4.9%
General Growth Properties Inc.4.5%
Health Care REIT Inc.4.4%
Public Storage4.2%
Ventas Inc.4.2%
AvalonBay Communities Inc.4.2%
Boston Properties Inc.4.1%
Essex Property Trust Inc.3.2%
SL Green Realty Corp.3.1%
Total % Portfolio in Top 10 holdings47.5%

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

Top sectors as of 02/28/2015
List excludes cash and cash equivalents.
Sector% of portfolio
Regional Malls16.2%
Health Care10.5%
Shopping Centers8.2%
Self Storage6.3%
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: 28

(View bio)

Damon Andres

Damon 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 December 31, 2014

Within the Fund

For the fourth quarter of 2014, Delaware REIT Fund (Class A shares at net asset value and Institutional Class shares) underperformed its benchmark, the FTSE NAREIT Equity REITs Index. Notes on relative performance at the sector level follow:

In the regional malls sector, Simon Property Group disclosed midway through the quarter that it had purchased a 3.9% position in Macerich, which then gained 24% during the quarter. Having no position in Macerich, the Fund underperformed in the sector. At current valuations, we think it’s unlikely that Simon can acquire all of Macerich. However, given the sector’s valuation overall, we did add to the Fund’s position in General Growth Properties, which we believe has a stronger portfolio than that of Macerich.

The Fund’s underweight in the self-storage sector marginally hurt performance. The sector has continued to benefit from low supply and favorable cost of capital. Publicly traded companies also have the ability to implement superior technology platforms compared to privately held competitors that are often underfunded. Although cash flows may slow from high single digits in 2015, investors are still bidding these shares higher as their growth rate on a relative basis continues to outperform real estate investment trusts (REITs) overall. We think supply should increase over time and that current valuations more than reflect all this good news.

An overweight in Starwood Hotels & Resorts Worldwide resulted in Fund underperformance in the lodging sector. The company’s international properties are facing difficult conditions given the economic slowdown in Europe and emerging markets. In contrast, its domestic hotel business is strong. Overall supply is low and RevPAR (revenue per available room) has been increasing at a high single-digit pace. Transient business, both leisure and business, has been driving solid rate and occupancy gains. Additionally, the lodging industry expects that its group business will likely return to pre-crisis levels as company travel budgets increase.

The Fund’s exposure to the freestanding sector benefited from having only a small position (which we exited) in American Realty Capital Properties relative to the benchmark. After the company revealed an accounting problem in late October, the stock declined more than 20%. Accounting irregularities involving a small amount of deferred expenses triggered the selloff, but investor sentiment was already waning given the company’s aggressive acquisition program and ongoing corporate-governance issues. Overall, the sector has benefited from its long-duration leases and the decline in Treasury yields.

There were two main drivers of outperformance in the diversified sector. First, the Fund’s position in Gramercy Property Trust benefited from a large acquisition that increased Gramercy’s size and demonstrated that it can deliver on its commitments. Second, the Fund’s lack of a position in Cousins Properties (which we sold earlier in the year, based on valuation) proved beneficial as well during the quarter. With 48% of the company’s portfolio in Texas, the stock sold off late in the year along with the rest of the energy sector.

Although the Fund was underweight compared to the benchmark in the healthcare sector, our stock selection was strong as Health Care REIT gained more than 20% and Healthcare Trust of America, a medical office REIT, gained more than 15%. The sector has continued to benefit from lower yields. As is the case with the freestanding sector, the average lease term in the healthcare sector is more than 10 years. In a slow growth environment, stable and predictable leases typically garner a higher multiple. If rates were to rise as they did in 2013, these sectors would likely underperform as investors look for more cyclicality.


While the Fund’s absolute performance was strong in 2014, we expected a better year on a relative basis. Our approach is to identify companies that have the potential to generate increasing cash flows and prudently raise capital. The REIT industry can provide stability of cash flow, while the capital markets decide what multiple to place on that cash flow. We look at historical valuations for long-term guidance when the market becomes overly enthusiastic or turns severely negative with certain sectors.

In 2014, healthcare and freestanding, two of the slower growth sectors of real estate, outperformed. During that time, these sectors were unusually sensitive to movements in the 10-year Treasury note. Historically, these stocks have had very low correlation — just 0.30–0.35x — to movements in interest rates. Today, their correlation to the movement in interest rates has increased to 0.80x. With rates declining from nearly 3% at the end of 2013 to the low 2% range at the end of 2014, these sectors had achieved strong returns and the Fund’s underweight was suboptimal (source: FTSE, Bloomberg).

We believe that, over the long term, investment decisions should be made not on the movement of interest rates but on the characteristics of companies that enable them to add value. If investing were only about interest rates driving long-term REIT returns, we would just buy Treasury notes and leverage them 10 to 1. We wouldn’t have to concern ourselves about company fundamentals or management decisions. Given investors’ current thirst for yield at any price, we choose, instead, to base our investment decisions on valuation and on our belief that, fundamentally, interest rates are not the final arbiter of value.

As always, we appreciate your support.

Diversification may not protect against market risk.


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.

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 03/31/2015)

Institutional ClassPriceNet changeYTD
Max offer price$16.11n/an/a

Total net assets (as of 02/28/2015)

$260.7 million all share classes

Lipper ranking (as of 02/28/2015)

YTD ranking109 / 270
1 year139 / 253
3 years92 / 218
5 years53 / 172
10 years74 / 129
Lipper classificationReal Estate Funds

(View Lipper disclosure)

Any Macquarie Group entity or fund noted on this page is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and that entity's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. 

Delaware Investments refers to Delaware Management Holdings, Inc. (DMHI) and its subsidiaries. Delaware Investments is a member of Macquarie Group. Macquarie Group refers to Macquarie Group Limited (MGL) and its subsidiaries and affiliates worldwide.

© 2015 Delaware Management Holdings, Inc.