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 (05/31/2016)

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

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)8.56%-0.16%7.66%8.39%6.68%10.53%11/09/1992
Russell 2000 Value Index5.76%-2.75%6.10%7.55%5.25%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.54%-5.78%6.66%7.33%5.93%10.38%11/09/1992
Russell 2000 Value Index1.70%-7.72%5.73%6.67%4.42%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 05/31/2016Russell 2000 Value Index
Number of holdings1111,312
Market cap (median)$2.14 billion$0.63 billion
Market cap (weighted average)$2.80 billion$1.85 billion
Portfolio turnover (last fiscal year)20%n/a
Beta (relative to Russell 2000 Value Index) (view definition)0.95n/a
Annualized standard deviation, 3 years (view definition)14.27n/a
Portfolio composition as of 05/31/2016Total may not equal 100% due to rounding.
Domestic equities98.0%
Cash and cash equivalents2.0%
Top 10 equity 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
East West Bancorp Inc.2.9%
Berry Plastics Group Inc.2.0%
Webster Financial Corp.2.0%
Selective Insurance Group Inc.1.9%
MasTec Inc.1.7%
Synopsys Inc.1.6%
Bank of Hawaii Corp.1.6%
HB Fuller Co.1.5%
Olin Corp.1.5%
Southwest Gas Corp.1.5%
Total % Portfolio in Top 10 holdings18.2%

Equity sectors as of 05/31/2016

List excludes cash and cash equivalents.

Financial services27.2%0.0%
Basic industry9.7%0.0%
Capital spending7.8%0.0%
Consumer services7.0%0.0%
Consumer cyclical3.8%0.0%
Consumer staples3.4%0.0%
Business services1.6%0.0%
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 fees0.67%
Distribution and service (12b-1) feesnone
Other expenses0.29%
Total annual fund operating expenses0.96%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.96%

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 March 31, 2016

Within the Fund

Delaware Small Cap Value Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the Russell 2000® Value Index, for the first quarter of 2016. Stock selection in the consumer services, healthcare, and transportation sectors contributed to relative outperformance. On the negative side, the Fund’s underweight allocation to the stronger-performing real estate investment trust (REIT) and utilities sectors detracted from performance.

Contributing to the Fund’s performance during the quarter were shares of Super Micro Computer. Super Micro Computer designs, distributes, and supports computer servers, cloud computing, networking devices, and enterprise solutions. Shares increased 39% during the quarter as the company released positive preliminary results for December and went on to report a solid quarter driven by strong data center and storage system sales. The company also added a new tier 1 client during the quarter. We maintained the Fund’s position in Super Micro Computer as we believe the company seems to be well positioned to benefit from the adoption of cloud computing and a converged information technology infrastructure.

Shares of Teleflex also contributed to the Fund’s performance during the quarter. Teleflex, a medical device manufacturer, saw its shares appreciate 20% during the quarter, driven by a solid earnings report and better-than-expected guidance for 2016. While we continue to like the prospects for the company, we reduced the Fund’s position during the quarter since we believe our positive views are reflected in the company’s valuation.

EnPro Industries is a manufacturer of engineered products serving the transportation, oil & gas, chemical, power, and general industrial markets. Shares of EnPro Industries gained 32% during the quarter after a better-than-expected fourth quarter earnings report and the comprehensive agreement settling all of the company’s outstanding asbestos claims. The settlement has favorable terms for the company and requires little external funding, which should help to remove an overhang for the stock’s price. We maintained the Fund’s position in EnPro Industries and continue to be constructive on the company’s improving operating margins and shareholder-friendly cash deployment.

Detracting from performance were shares of East West Bancorp, which declined 21% during the quarter. East West Bancorp is a regional bank that focuses on the financial service needs of individuals and businesses operating in both the United States and Greater China, as well as Chinese-American individuals and businesses. While the company does not have earnings exposure to the Chinese economy, investors were concerned that the company did, which may have pressured the stock. We maintained the Fund’s position in East West Bancorp — its customers are primarily domestic businesses and individuals in the United States, and the bank has strong financials and capital deployment practices.

Shares of NetScout Systems declined 25% during the quarter. The company provides and supports a family of integrated products that enable performance management and optimization of complex, high-speed electronic networks. In late January, the company reported a strong fourth quarter with both revenue and earnings exceeding consensus estimates that were driven, in part, by year-end service provider spending. However, the company indicated that it was beginning to see its service provider customers become cautious with spending. We added to the Fund’s position in NetScout Systems because we believe the company continues to be well positioned. However, we acknowledge that the spending patterns of the company’s largest customers, the service providers, have the potential to be very erratic.

Also detracting from performance during the quarter were shares of Bonanza Creek Energy, an independent exploration and production company with primary operations in the Wattenberg Field in Colorado. The stock declined 64% during the quarter as the price of oil suffered a significant decline during most of the first quarter. Additionally, the company’s previous agreement to sell its mid-stream assets was not able to be completed. We sold the Fund’s position in the stock as we became uncomfortable with management’s financial decision to proactively draw down its revolving loan balance.


While oil and oil-related industries have certainly affected a segment of the economy, other economic indicators seem to support our view that the U.S. economy could continue to grow at a moderate pace. Labor markets continued to strengthen during the first quarter with unemployment now standing at 5.0%. It’s important to note that the labor force participation rate has also improved, which should bode well for economic growth. Consumer confidence remains healthy and, while not robust, consumer spending remains relatively steady.

Over the past two years, the Russell 2000® Index has underperformed the larger-cap Russell 1000® Index by approximately 16 percentage points (on a total return basis). This difference is even larger when comparing the Russell 2000 Value Index with the Russell 1000 Index. We believe that this significant small-cap stock underperformance has led these companies to look more attractive from a relative valuation standpoint when compared to large-cap stocks. If the market remains choppy — as it was for much of the first quarter of this fiscal year and much of 2015 — we believe that higher-quality small-cap stocks with strong balance sheets have the potential to outperform.

The Fund remains overweight some of the more cyclical sectors as we believe valuations and free cash flow generation continue to be more attractive in these sectors. The largest overweights in the Fund are in the basic industry and capital spending sectors. Defensive sectors, including REITs and utilities, remain less attractive to us on a relative 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 disciplined philosophy remains unchanged. We continue to focus on finding what we view as attractively valued stocks that generate ample 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 during 2015 and early 2016.

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 Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe.

The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower 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 06/27/2016)

Institutional ClassPriceNet change
Max offer price$49.07n/a

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

$2.7 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 05/31/2016)
RatingNo. of funds
3 Yrs4372
5 Yrs4331
10 Yrs4213
Morningstar categorySmall Value

(View Morningstar disclosure)

Lipper ranking (as of 05/31/2016)

YTD ranking33 / 852
1 year106 / 805
3 years272 / 694
5 years214 / 604
10 years141 / 409
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