Delaware National High-Yield Municipal Bond Fund


Delaware National High-Yield Municipal Bond Fund seeks a high level of current income exempt from federal income tax primarily through investment in medium- and lower-grade municipal obligations.


The Fund primarily invests in high-yield U.S. state and local municipal bonds of various maturities, the income from which is exempt from federal income taxes.

Fund information
Inception date12/31/2008
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 (05/31/2016)

as of quarter-end (03/31/2016)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)4.22%7.94%5.47%8.32%n/a10.78%12/31/2008
Barclays Municipal Bond Index2.70%5.87%4.03%5.07%n/a6.00%
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)2.18%5.47%4.90%8.72%n/a10.73%12/31/2008
Barclays Municipal Bond Index1.67%3.98%3.63%5.59%n/a5.99%

Returns for less than one year are not annualized.

Benchmark lifetime returns are as of the Fund's inception date.

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

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Dec. 29, 2015 through Dec. 29, 2016. Please see the fee table in the Fund’s prospectus for more information.

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 05/31/2016Barclays Municipal Bond Index
Number of holdings45949,372
Portfolio turnover (last fiscal year)10%n/a
Modified duration (view definition)5.99 years4.81 years
Effective maturity (weighted average) (view definition)8.54 years12.99 years
Average market price (view definition)$112.01n/a
Average coupon (view definition)5.80%4.78%
Yield to worst (view definition)3.62%1.85%
Alternative minimum tax10.11%3.94%
SEC 30-day yield with waiver (view definition)2.97%
SEC 30-day yield without waiver (view definition)2.88%
Annualized standard deviation, 3 years (view definition)5.31n/a
Portfolio composition as of 05/31/2016Total may not equal 100% due to rounding.
Municipal bonds99.3%
Cash and cash equivalents0.7%

Cash and cash equivalents include accruals on bonds and long-term receivables.

Top 10 fixed income holdings as of 05/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Buckeye Tobacco Settlement Financing Authority 5.875 6/1/20472.6%
Tobacco Settlement Financing Corp/NJ 5.000 6/1/20412.2%
County of Jefferson AL Sewer Revenue 6.500 10/1/20531.7%
Texas Municipal Gas Acquisition & Supply Corp. I 6.250 12/15/20261.4%
Salt Verde Financial Corp. 5.000 12/1/20371.4%
California Statewide Communities Development Authority 5.500 12/1/20541.2%
New York Liberty Development Corp. 5.250 10/1/20351.1%
New York Liberty Development Corp. 7.250 11/15/20441.0%
Buckeye Tobacco Settlement Financing Authority 6.500 6/1/20471.0%
New York Liberty Development Corp. 5.000 11/15/20440.9%
Total % Portfolio in Top 10 holdings14.5%

Fixed income sectors as of 05/31/2016

List excludes cash and cash equivalents.

IDR/PCR (corporate)20.6%2.9%
Special tax7.5%9.5%
Local general obligations4.2%12.4%
Water & sewer3.6%8.6%
State general obligations1.6%14.6%
Resource recovery0.6%0.2%
Credit quality as of 05/31/2016
Not rated26.1%0.0%

Total may not equal 100% due to rounding. The Fund’s investment manager, Delaware Management Company (DMC), a series of Delaware Management Business Trust, receives “Credit Quality” ratings for the underlying securities held by the Fund from three “nationally recognized statistical rating organizations” (NRSROs): Standard & Poor’s (S&P), Moody’s Investors Service, and Fitch, Inc. The credit quality breakdown is calculated by DMC based on the NRSRO ratings. If two or more NRSROs have assigned a rating to a security the higher rating (lower value) is used. If only one NRSRO rates a security, that rating is used. Securities that are unrated by any of the three NRSROs are included in the “not rated” category when applicable. Unrated securities do not necessarily indicate low quality. More information about securities ratings is contained in the Fund’s Statement of Additional Information.

Top 10 states as of 05/31/2016
State% of portfolio
New York12.2%
New Jersey6.1%
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 (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. 

Joe Baxter

Joe Baxter  

Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager

Start date on the Fund: May 2003

Years of industry experience: 31

(View bio)

Steve Czepiel

Steve Czepiel  

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: July 2007

Years of industry experience: 34

(View bio)

Greg Gizzi

Greg Gizzi 

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: December 2012

Years of industry experience: 32

(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 fees0.53%
Distribution and service (12b-1) feesnone
Other expenses0.18%
Total annual fund operating expenses0.71%
Fee waivers and expense reimbursements(0.11%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.60%

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

1The Fund's investment manager, Delaware Management Company (Manager), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse 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) in order to prevent total annual fund operating expenses from exceeding 0.60% of the Fund's average daily net assets from Dec. 29, 2015 through Dec. 29, 2016. 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 National High-Yield Municipal Bond Fund Quarterly commentary March 31, 2016


The high yield municipal bond market, as measured by the Barclays High-Yield Municipal Bond Index, returned 2.74% for the quarter as investors continued their search for yield. The index returned 3.42% when excluding its Puerto Rico securities, a sector that constituted more than 22% of the index. Meanwhile, the municipal bond market, as measured by the Barclays Municipal Bond Index, posted a 1.67% return in the first quarter of 2016, with yields declining across virtually all maturities beyond one year.

Overall, the quarter was characterized by risk-off / risk-on periods driven primarily by global upheaval and central bank responses. These ebbs and flows also influenced market expectations for domestic rate hikes by the U.S. Federal Reserve’s Open Market Committee (FOMC). As 2016 began, risk markets immediately went into free fall due to a number of factors: uncertainty about China’s intentions for its currency; a continued decline in commodity prices, particularly oil; the recent move to negative interest rates in Japan; and mixed economic data (with the exception of consistent payroll growth) in the United States. By mid-February, the S&P 500® Index was down more than 10%, corporate bond spreads widened significantly, and both developed and emerging market stocks had sold off. Amid the turmoil, expectations for rate hikes dropped significantly; as the quarter ended, the markets were pricing in less than a 50% chance of a rate hike before the November 2016 FOMC meeting.

Buoyed by expectations of central bank easing that took hold in February, risk markets recovered strongly, with the S&P 500 Index regaining all its earlier losses and posting a 1.35% return for the quarter. Both investment grade and high yield taxable bond spreads tightened to early January levels and foreign risk markets also recouped at least a majority of their losses.

Within the municipal bond market, the yield curve steepened in January as short-to-intermediate yields fell in concert with reduced expectations for a March interest rate hike. That pattern lasted into mid-February, when investor appetite for risk returned. Also around that time, seasonal technical factors in the form of additional supply weighed on the municipal bond market, particularly short maturities. Still, demand for municipal bonds (as measured by mutual fund flows) remained solid, and the correction was short lived.

Within the Fund

For the first quarter of 2016, Delaware National High-Yield Municipal Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the Barclays Municipal Bond Index.

The primary contributor for the first quarter of 2016 was the Fund’s out-of-benchmark exposure to below-investment-grade securities. The Barclays High-Yield Municipal Bond Index returned 2.74% versus the Barclays Municipal Bond Index return of 1.67%. Additionally, an overweight position in the Long Bond segment (22-plus years) helped drive performance. The Barclays Municipal Bond Index’s Long Bond segment returned 2.24% for the quarter.

One commodity-based security detracted from the Fund’s performance during the quarter.


Once again, a new quarter began amid conflicting signals from policy makers, the economy and the markets, with Fed Chairwoman Janet Yellen presenting a dovish case for monetary policy despite respectable domestic economic data. Even after the Fed’s more accommodating stance at its March FOMC meeting — where its Summary of Economic Projections known as the “dots” were lowered — the Fed is still anticipating two rate hikes in 2016 compared to the market’s expectation of just one hike. Over the past few years the Fed has been more bullish than the markets on both growth and inflation, and as central bank forecasts have failed to materialize, policy makers seem to have adjusted their stance to be more in line with market expectations.

This change at the Fed reinforces our “lower for longer” theme for interest rates, while still avoiding a U.S. recession. In an environment of subdued interest rates and slow growth, we believe our strategic overweight to credit and the additional income we earn should continue to generate excess return for the portfolios. We also believe that unless the current rates and growth environment changes, we can tactically take advantage of seasonal patterns that occur in the municipal bond market.

The Barclays High-Yield Municipal Bond Index measures the total return performance of the long-term, non-investment-grade tax-exempt bond market.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the U.S. stock market.


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.

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

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local taxes and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential 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 06/28/2016)

Institutional ClassPriceNet change
Max offer price$11.52n/a

Total net assets (as of 05/31/2016)

$1.2 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 05/31/2016)
RatingNo. of funds
3 Yrs4166
5 Yrs4145
10 Yrs595
Morningstar categoryHigh Yield Muni

(View Morningstar disclosure)

Lipper ranking (as of 05/31/2016)

YTD ranking59 / 160
1 year50 / 144
3 years24 / 124
5 years20 / 110
10 yearsn/a
Lipper classificationHi Yld Muni Debt Funds

(View Lipper disclosure)

Benchmark, peer group

Barclays Municipal Bond Index (view definition)

Lipper High Yield Municipal Debt Funds Average (view definition)

Additional information