Delaware Small Cap Value Fund


Delaware Small Cap Value Fund seeks capital appreciation.


The Fund invests primarily in investments of small companies whose stock prices appear low relative to their underlying value or future potential.

Fund information
Inception date11/09/1992
Dividends paid (if any)Annually
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 (01/31/2016)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-6.88%-8.36%4.95%6.39%5.20%9.96%11/09/1992
Russell 2000 Value Index-6.72%-9.94%4.53%6.17%4.01%n/a
Average annual total return as of quarter-end (12/31/2015)
Current quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)2.00%-6.21%9.50%8.08%6.72%10.33%11/09/1992
Russell 2000 Value Index2.88%-7.47%9.06%7.67%5.57%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 01/31/2016
Number of holdings112
Market cap (median)$1.79 billion
Market cap (weighted average)$2.40 billion
Portfolio turnover (last fiscal year)20%
Beta, 3 years (relative to Russell 2000 Value Index) (view definition)0.93
Annualized standard deviation, 3 years (view definition)13.50
Portfolio composition as of 01/31/2016Total may not equal 100% due to rounding.
Domestic equities99.8%
Cash and cash equivalents0.2%
Top 10 holdings as of 01/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
East West Bancorp Inc.2.7%
Webster Financial Corp.1.9%
Berry Plastics Group Inc.1.9%
Selective Insurance Group Inc.1.8%
Synopsys Inc.1.7%
Bank of Hawaii Corp.1.7%
Community Bank System Inc.1.5%
HB Fuller Co.1.5%
Southwest Gas Corp.1.5%
ITT Corp.1.4%
Total % Portfolio in Top 10 holdings17.6%
Top sectors as of 01/31/2016
List excludes cash and cash equivalents.
Sector% of portfolio
Financial services27.4%
Basic industry9.2%
Consumer services8.2%
Capital spending7.3%
Consumer cyclical4.0%
Consumer staples3.9%

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

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 (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. 

Chris Beck

Christopher S. Beck, CFA

Senior Vice President, Chief Investment Officer — Small-Cap Value / Mid-Cap Value Equity

Start date on the Fund: May 1997

Years of industry experience: 35

(View bio)

Steve Catricks

Steven G. Catricks, CFA

Vice President, Portfolio Manager, Equity Analyst

Start date on the Fund: July 2012

Years of industry experience: 17

(View bio)

Kent Madden

Kent P. Madden, CFA

Vice President, Portfolio Manager, Equity Analyst

Start date on the Fund: July 2012

Years of industry experience: 19

(View bio)

Kelly McKee

Kelley A. McKee, CFA

Vice President, Portfolio Manager, Equity Analyst

Start date on the Fund: July 2012

Years of industry experience: 13

(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 fees0.68%
Distribution and service (12b-1) feesnone
Other expenses0.29%
Total annual fund operating expenses0.97%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.97%

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

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Delaware Small Cap Value Fund Quarterly commentary December 31, 2015

Within the Fund

Delaware Small Cap Value Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the Russell 2000® Value Index, for the fourth quarter of 2015. Stock selection in the technology, consumer services, and energy sectors detracted from relative performance. On the positive side, we were able to generate excess returns from stock selection in the basic industry, real estate investment trust (REIT), and capital spending sectors.

The largest detractor from the Fund’s performance during the quarter was SM Energy, an oil and gas exploration and production company with primary operations in the Eagle Ford Shale and Williston Basin areas of the United States. The stock declined 39% as the price of oil and natural gas fell during the quarter, leading to earnings estimate and cash flow reductions for the company. We added to the position during the quarter due to what we viewed as the company’s attractive relative valuation versus its peers, balance sheet strength, and a production profile that is moving towards more of an oil mix, as opposed to natural gas.

CommScope Holding provides connectivity and infrastructure solutions for wireless, business enterprise, and residential broadband networks worldwide. Shares of CommScope declined 14% during the quarter as the company reported weak third quarter revenue and provided guidance for a weaker-than-expected fourth quarter. The company cited soft wireless carrier spending in both the U.S. and Europe as a reason for the shortfall. We maintained the Fund’s position in CommScope as we anticipate a more stable U.S. wireless capital spending environment in 2016. In addition, we believe that synergies from the company’s recent acquisition of TE Connectivity’s Broadband Network Solutions business unit could provide margin expansion.

Shares of Wolverine World Wide, a footwear manufacturer with brands that include Sperry Top-Sider, Merrell, and Saucony, detracted from performance during the quarter as the stock fell 23%. The decline resulted from a reduction in full-year earnings guidance, which was due to a softer than anticipated retail environment. We maintained the Fund’s position in Wolverine as we continue to favor the company’s broad product portfolio and strong cash flow generation. In addition, we believe the company is attractively valued at current levels.

In terms of contributors to the Fund’s performance, Albemarle, which advanced 28%, is a specialty chemical company that sells refinery catalysts, lithium, bromine, and metal surface treatment products. Increased pricing for lithium and bromine products and improving operating margins contributed to the company’s third quarter earnings beat. In addition, the company continued to have a strong outlook for free cash flow generation and increased synergy targets for 2016 as a result of its acquisition of Rockwood chemical in early 2015. We maintained the Fund’s position in Albemarle and continue to be constructive on the company’s ability to improve margins, see further pricing gains, and generate strong free cash flow.

Shares of STERIS gained 16% during the quarter with most of the appreciation occurring after the company reported solid September quarter results. In addition, in early October, STERIS shareholders approved the merger of the company with U.K.-based Synergy Health. STERIS provides infection prevention products and services to healthcare customers. We believe that Synergy Health should nicely complement the products and services that STERIS provides, while also providing the potential for earnings accretion. We trimmed the Fund’s position in STERIS during the quarter, but we remain attracted to the company’s business model and healthy cash flow generation.

Within the consumer staples sector of the portfolio, Core-Mark Holding, a distributor of products to convenience stores, gained 25% as the company announced new supply agreements with convenience store chains Murphy USA and 7-Eleven. These contracts have the potential to be accretive to earnings. While we trimmed the Fund’s position in Core-Mark during the quarter, we continue to own the stock as we remain attracted to the combination of the company’s prospects for growth and margin enhancement and its solid balance sheet and cash flow generation.


Notwithstanding December’s market selloff, we have a constructive outlook for small-cap companies, particularly those of higher quality. We believe the main risks to the U.S. economy at this time are slowing growth in China and geopolitical risk in the Middle East. The decline in revenues from the low price of oil will likely have an effect on many members of the Organization of Petroleum Exporting Countries (OPEC), as oil is a primary source of revenue for these countries and fiscal budgets will need to be adjusted downward. Additionally, a strong dollar is usually a positive sign for the U.S. economy, but can have a negative effect on corporate profits and emerging market economies.

The Russell 2000® Growth Index has now outperformed the Russell 2000 Value Index for three consecutive years. This is largely a result of the strong relative performance in the healthcare and technology sectors, which have larger weightings in the Russell 2000 Growth Index. We believe that when the growth outlook improves, investors will be more willing to shift away from a narrow-market focus to a broad-market focus.

We were pleased to see the U.S. merger and acquisition (M&A) figures for 2015 set a record for total deal value. We anticipate that the low interest rate environment should further support M&A into 2016. In addition, companies continue to be active in repurchasing shares which we view as favorable.

The Fund’s portfolio has remained overweight some of the more cyclical sectors, as we believe valuations and free cash flow generation continue to be attractive in these sectors. The largest overweights in the Fund remain in basic industries and capital spending, followed by healthcare and technology. Defensive sectors, including REITs and utilities, remain unattractive to us on a relative valuation basis. As a result, we remain underweight these sectors. We will look to add to the Fund’s weights in these defensive sectors if we see valuations contract to what we view as more reasonable levels relative to other sectors.

Our team’s philosophy remains unwavering. We continue to focus on finding what we view as attractively valued stocks that have the potential to generate strong free cash flow, have strong balance sheets, and are likely to deploy their cash in shareholder-friendly ways such as share repurchases or increasing dividends. We believe our focus on high-quality stocks should serve us well over the long term. We also believe that this focus could serve us well during periods of increased market volatility and higher uncertainty, similar to what we witnessed during a number of periods in 2015.

The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.


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.

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

Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.

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.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

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.

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 02/12/2016)

Institutional ClassPriceNet change
Max offer price$43.20n/a

Total net assets (as of 01/31/2016)

$2.3 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 01/31/2016)
RatingNo. of funds
3 Yrs3372
5 Yrs3323
10 Yrs4210
Morningstar categorySmall Value

(View Morningstar disclosure)

Lipper ranking (as of 01/31/2016)

YTD ranking346 / 868
1 year407 / 801
3 years478 / 685
5 years361 / 607
10 years153 / 396
Lipper classificationSmall-Cap Core Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 2000® Value Index (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information