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 (09/30/2016)

as of quarter-end (09/30/2016)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)15.56%17.87%7.71%14.91%7.29%10.66%11/09/1992
Russell 2000 Value Index15.49%18.81%6.77%15.45%5.78%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)7.31%17.87%7.71%14.91%7.29%10.66%11/09/1992
Russell 2000 Value Index8.87%18.81%6.77%15.45%5.78%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 09/30/2016Russell 2000 Value Index
Number of holdings1161,338
Market cap (median)$2.31 billion$0.62 billion
Market cap (weighted average)$3.00 billion$1.73 billion
Portfolio turnover (last fiscal year)20%n/a
Beta (relative to Russell 2000 Value Index) (view definition)0.94n/a
Annualized standard deviation, 3 years (view definition)13.55n/a
Portfolio composition as of 09/30/2016Total may not equal 100% due to rounding.
Domestic equities99.7%
Cash and cash equivalents0.3%
Top 10 equity holdings as of 09/30/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
East West Bancorp Inc.2.6%
Berry Plastics Group Inc.2.2%
MasTec Inc.2.1%
Selective Insurance Group Inc.1.9%
Webster Financial Corp.1.8%
Synopsys Inc.1.8%
Bank of Hawaii Corp.1.6%
Community Bank System Inc.1.5%
Hancock Holding Co.1.5%
HB Fuller Co.1.5%
Total % Portfolio in Top 10 holdings18.5%

Equity sectors as of 09/30/2016

List excludes cash and cash equivalents.

Financial services27.1%0.0%
Basic industry9.9%0.0%
Capital spending7.9%0.0%
Consumer services6.8%0.0%
Consumer cyclical3.7%0.0%
Consumer staples3.3%0.0%
Business services1.5%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: 20

(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: 14

(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 September 30, 2016

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 third quarter of 2016. Stock selection detracted the most from the Fund’s performance during the quarter. Specifically, stock selection in the healthcare, basic industry, and consumer staples sectors detracted from performance. An underweight allocation to the utilities sector contributed to the Fund’s performance, as it was the only negative-performing sector in the Index during the quarter. Stock selection in the energy sector contributed to the Fund’s performance, as did an overweight allocation to the capital spending sector.

Shares of Essendant, a wholesale distributor of office products, facility essentials, and industrial supplies, detracted from the Fund’s performance. The stock declined 32% during the quarter. The company reported operating results for the second quarter that were well below expectations. Although revenue was roughly in line with expectations, gross margins were well below forecast due to customer and product mix shifts. Industry consolidation has resulted in lower sales to higher-margin small accounts as volume has shifted to lower-margin large accounts. We maintained the Fund’s position following the selloff — the company generates solid free-cash flow, has a 14% free-cash flow yield, and is returning cash to shareholders. Additionally, we anticipate that management will take decisive action to drive improvements in gross margins.

In the consumer staples sector, shares of distribution company Core-Mark Holding Company sold off by 23% during the quarter after losing the Southeast regional contract for one of its largest convenience store customers. We estimate that the lost contract accounted for roughly 5% of the company’s revenue. We have been reducing the Fund’s position in the stock prior to this announcement, largely due to valuation. However, after the announcement of the contract loss and subsequent stock decline, we decided to add to the position as we believed the selloff was overdone. We continue to favor the company’s long-term strategy as it broadens its geographic breadth and sells more products to existing customers. Furthermore, we believe the company has a stable business model and has the potential to generate strong cash flow.

Shares of Olin declined 17% during the quarter after rising 44% during the second quarter. Olin is a commodity chemical company that primarily produces chlorine, caustic soda, epoxy, and derivative chlorine products. The company missed quarterly earnings and lowered full-year guidance as a result of lower-than-expected realized caustic prices, higher raw material and natural gas prices, and a lack of price improvement in ethylene dichloride (EDC). While we were disappointed with the company’s results and the stock’s performance, we maintain the Fund’s position in Olin as we believe higher pricing in caustic soda and EDC should improve earnings.

On the positive side, shares of audio and voice semiconductor supplier Cirrus Logic gained 37% during the quarter following an earnings report that exceeded expectations. The positive results were due, in part, to content gains at Apple for the iPhone 7 and the introduction of new products. We trimmed the Fund’s position in Cirrus Logic; however, we continue to hold the stock as new product cycles are on the horizon and the company continues to diversify its customer base. The company generates strong cash flow and is returning cash to shareholders in the form of stock repurchases.

Trinseo is a hybrid chemical company that manufactures both commodity and specialty products that include rubber, plastics, and styrenics. Shares of Trinseo gained 33% during the quarter after reporting quarterly results that were well above expectations, in addition to increasing full-year earnings guidance. Moreover, strong cash flow generation led the company to announce a new share repurchase program and initiate a quarterly dividend. We maintained the Fund’s position in Trinseo during the quarter as the company trades at an attractive valuation, has accelerating cash flow, and has shown improving performance in operating segments.

Shares of regional bank Hancock Holding increased 25% during the quarter. The company’s financial results for the second quarter of 2016 showed strong loan growth coupled with only a moderate level of loan-loss provision expense. More than 10% of Hancock’s loans are to companies in the oil and gas industry, causing the company’s shares to trade at a meaningful discount to its peers prior to its most recent earnings release. We maintained the Fund’s position in Hancock as we believe the company provided an adequate level of loan-loss reserves during previous periods to account for its exposure to oil and gas companies.


We remain positioned for a moderate economic recovery as we believe it will be difficult for the country’s growth to break out of the 1% to 3% range. The markets seem quite sensitive to U.S. Federal Reserve statements, and we continue to pay close attention to its message. The Fed has gone out of its way to make markets aware that it will be data dependent with its policy.

The upcoming U.S. presidential election could cause market volatility, but it will likely be short lived. We could also see volatility increase, as we saw a 30% return in small-cap markets since the February lows that has pushed valuations higher. We will need to see companies meet earnings expectations to support current price levels. An encouraging sign is that companies continue to exercise shareholder-friendly actions and are buying back stock and issuing dividends at record levels.

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 overweight sector positionings in the Fund are in the basic industry and capital spending sectors. The Fund is now overweight the technology sector as we are finding companies that are returning capital to shareholders and generating healthy free-cash flow. During the third quarter, we purchased two stocks in the sector. The Fund remains underweight the defensive sectors, including real estate investment trusts (REITs) and utilities, as they remain less attractive to us on a relative valuation basis.

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 repurchasing shares or increasing dividends. We also believe that this focus may serve us well during periods of increased market volatility and higher uncertainty. At current levels, we believe that higher-quality small-cap stocks with strong balance sheets have the potential to outperform.


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 10/21/2016)

Institutional ClassPriceNet change
Max offer price$55.20n/a

Total net assets (as of 09/30/2016)

$2.9 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 09/30/2016)
RatingNo. of funds
3 Yrs4371
5 Yrs3334
10 Yrs4213
Morningstar categorySmall Value

(View Morningstar disclosure)

Morningstar ranking (as of 09/30/2016)

YTD ranking69 / 450
1 year105 / 433
3 years81 / 371
5 years159 / 334
10 years51 / 213
Morningstar categorySmall Value

(View Morningstar disclosure)

Lipper ranking (as of 09/30/2016)

YTD ranking41 / 867
1 year81 / 854
3 years164 / 712
5 years312 / 622
10 years156 / 425
Lipper classificationSmall-Cap Core Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 2000® Value Index (view definition)

Morningstar Small Value Category (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information