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 (10/31/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.73%-0.67%12.56%11.51%7.60%10.64%11/09/1992
Russell 2000 Value Index-5.02%-2.88%11.65%10.53%6.19%n/a
Average annual total return as of quarter-end (09/30/2015)
Last quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-9.82%-4.01%9.78%10.62%6.70%10.36%11/09/1992
Russell 2000 Value Index-10.73%-1.60%9.18%10.17%5.34%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 10/31/2015
Number of holdings114
Market cap (median)$2.03 billion
Market cap (weighted average)$2.68 billion
Portfolio turnover (last fiscal year)17%
Beta, 3 years (relative to Russell 2000 Value Index) (view definition)0.90
Annualized standard deviation, 3 years (view definition)12.41
Portfolio composition as of 10/31/2015Total may not equal 100% due to rounding.
Domestic equities98.3%
Cash and cash equivalents1.7%
Top 10 holdings as of 10/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
East West Bancorp Inc.2.9%
Webster Financial Corp.1.9%
Selective Insurance Group Inc.1.8%
Synopsys Inc.1.7%
Berry Plastics Group Inc.1.7%
Bank of Hawaii Corp.1.6%
STERIS Corp.1.5%
ITT Corp.1.5%
Community Bank System Inc.1.4%
CommScope Holding Co. Inc.1.4%
Total % Portfolio in Top 10 holdings17.4%
Top sectors as of 10/31/2015
List excludes cash and cash equivalents.
Sector% of portfolio
Financial services26.3%
Basic industry9.0%
Consumer services8.0%
Capital spending7.4%
Consumer cyclical4.0%
Consumer staples3.2%

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: 34

(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: 16

(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 September 30, 2015

Within the Fund

Delaware Small Cap Value Fund (Institutional Class shares and Class A shares at net asset value) posted a negative return but outperformed its benchmark, the Russell 2000® Value Index, for the third quarter of 2015. Stock selection in the basic industry, technology, and healthcare sectors contributed the most to the Fund’s outperformance. Stock selection and a slight overweight allocation to the energy sector were the largest detractors from returns during the quarter. The Fund’s relative overweight in the capital spending sector also detracted from returns. The utilities sector performed the strongest during the quarter in both the Fund and in the Index; however, the Fund’s relative underweight detracted from returns.

Among the contributors to the Fund’s outperformance during the quarter were shares of Cytec Industries. Cytec is a specialty materials and chemical company serving the aerospace, mining, industrial, and plastic markets. In late July, Cytec agreed to be acquired by Belgian chemical group Solvay at a 29% premium to the prior day’s closing price. We did not anticipate a competing offer, and with the stock trading close to offer price, we decided to sell the position.

Shares of technology distributor and value-added service provider Tech Data increased 19% during the third quarter. The company benefited from strong sales execution in Europe with revenues growing 7% year over year on a constant currency basis. We maintained the Fund’s position in Tech Data as the company continues to expand its distribution and service offerings, optimize operations for higher margins, and generate solid cash flow.

StanCorp Financial Group, a life and health insurance company, appreciated 50% during the quarter as the company announced that it had agreed to merge with Meiji Yasuda Life Insurance Company, a Japanese company within the Mitsubishi Group. We sold the Fund’s position in StanCorp after the announcement, given the premium that Meiji Yasuda Life agreed to pay.

Detracting from performance during the quarter were shares of Bonanza Creek Energy. Bonanza Creek Energy is an independent exploration and production company with primary operations in the Wattenberg Field in Colorado. The stock declined 78% during the quarter due to the more than 20% decline in the price of oil (WTI Crude), in addition to fears that liquidity in 2016 may become an issue if the price of oil stays around current levels during the next year. We added to the position during the quarter — we believe the company maintains a solid asset base and is making appropriate moves to reduce overall capital spending to be more in-line with cash flow.

Olin manufactures and distributes chlor alkali products. The stock declined 37% during the quarter after the company reported that chlorine prices did not improve as expected. In addition, the pending acquisition of Dow Chemical’s chlor alkali business — which is to be partially funded by equity — likely caused some volatility in the stock price. We believe the deal is attractive and should generate significant cost synergies that are not currently reflected in the share price. As a result, we added to the Fund’s position during the quarter.

Overall, technology was a contributor during the quarter; however, one detractor within the sector was PTC, a software and services company focused on product and service lifecycle management. The company’s software is used to design, operate, and maintain complex products. Shares of PTC declined 23% during the quarter as the company reported weak earnings and a modestly reduced full-year outlook. The company has been affected by the global slowdown in manufacturing, weakening growth in China and, to a lesser extent, a stronger dollar. We continue to hold shares of PTC as the company’s Internet of Things business seems to be growing rapidly, and its core computer aided design business remains stable. In addition, PTC continues to control cost and generate strong cash flow.


Fears of slowing global economic growth caused the equity market to take a hit in the third quarter. As a result, valuations for small and mid-cap stocks became more attractive. Despite the headwinds from a stronger dollar, weakness in the energy sector, and slowing emerging economies, we believe that the economy can continue to grow at a moderate pace driven by continued growth in consumer spending.

Notwithstanding the market selloff, we believe the merger and acquisition (M&A) environment remains attractive given historically low interest rates. M&A transaction value may be poised to break the record set in 2007. After a slow start to the year with respect to the amount of M&A in the Fund, we have recently seen an uptick in activity with three announced mergers. In addition, companies continue to be active in repurchasing shares, which we view as favorable.

The Fund continues to be overweight some of the more cyclical sectors as we believe valuations continue to be attractive in these sectors. The largest overweights in the portfolio remain in basic industries and capital spending followed by healthcare and technology. Defensive sectors, including real estate investment trusts (REITs) and utilities, remain unattractive to us on a valuation basis. As a result, we remain underweight these sectors. We would 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 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 may serve us well during periods of increased market volatility and higher uncertainty, similar to what we witnessed in the third quarter.


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 11/27/2015)

Institutional ClassPriceNet changeYTD
Max offer price$55.26n/an/a

Total net assets (as of 10/31/2015)

$2.9 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 10/31/2015)
RatingNo. of funds
3 Yrs3367
5 Yrs4315
10 Yrs4200
Morningstar categorySmall Value

(View Morningstar disclosure)

Lipper ranking (as of 10/31/2015)

YTD ranking387 / 803
1 year508 / 795
3 years459 / 676
5 years309 / 600
10 years147 / 395
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