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 (08/31/2016)

as of quarter-end (06/30/2016)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)14.92%13.48%9.38%12.73%7.33%10.68%11/09/1992
Russell 2000 Value Index14.58%13.80%8.51%12.63%5.80%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)4.00%-0.94%7.73%8.59%6.67%10.45%11/09/1992
Russell 2000 Value Index4.31%-2.58%6.36%8.15%5.15%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 08/31/2016Russell 2000 Value Index
Number of holdings1141,348
Market cap (median)$2.38 billion$0.62 billion
Market cap (weighted average)$3.05 billion$1.72 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)13.81n/a
Portfolio composition as of 08/31/2016Total may not equal 100% due to rounding.
Domestic equities99.2%
Cash and cash equivalents0.8%
Top 10 equity holdings as of 08/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
East West Bancorp Inc.2.6%
Berry Plastics Group Inc.2.2%
MasTec Inc.2.1%
Selective Insurance Group Inc.1.8%
Webster Financial Corp.1.8%
Synopsys Inc.1.8%
Bank of Hawaii Corp.1.5%
Hancock Holding Co.1.5%
HB Fuller Co.1.4%
Community Bank System Inc.1.4%
Total % Portfolio in Top 10 holdings18.1%

Equity sectors as of 08/31/2016

List excludes cash and cash equivalents.

Financial services26.9%0.0%
Basic industry10.0%0.0%
Capital spending7.7%0.0%
Consumer services7.1%0.0%
Consumer cyclical3.7%0.0%
Consumer staples3.2%0.0%
Business services1.4%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 June 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 second quarter of 2016. While sector allocation contributed to performance during the quarter, it was more than offset by stock selection, which detracted from relative performance.

Within the Fund, an overweight allocation to the capital spending sector combined with stock selection detracted from performance, in addition to stock selection in the technology sector. In the utilities sector, stock selection detracted from the Fund’s performance, as did an underweight allocation (the sector performed well for the benchmark during the quarter).

Contributing to the Fund’s performance was an overweight allocation to the basic industry sector, as it was the strongest-performing sector in the Fund and benchmark during the quarter. The Fund also benefited from strong stock selection in the energy, financial services, and real estate investment trusts (REIT) sectors.

Within the technology sector, shares of computing solutions provider Super Micro Computer fell 27% during the quarter. The company reported weak results for the first quarter and slightly reduced its outlook for the second quarter due to continued demand weakness from general enterprise customers. Product cycles at Intel may have resulted in slow end-market demand during the first half of 2016. We believe the slow sales trends during the first half of 2016 — which was confirmed by other hardware and system vendors — is not an indication of changes in the competitive landscape for the company. 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.

Primoris Services is a specialty engineering and construction firm that provides services to the power, energy, water, infrastructure, and general industrial end markets. The company’s shares declined 22% during the second quarter after reporting an underwhelming quarterly earnings report, with lighter-than-expected margins and a weaker outlook for 2016 due to the timing of projects. We maintained the Fund’s position as we believe the timing issue is temporary and margins should improve in the second half of 2016.

While overall stock selection in the financial services sector was positive, one of the Fund’s holdings, American Equity Investment Life Holding — a life insurance company with a primary emphasis on the sale of fixed-indexed annuities — declined 15% and detracted from performance. On April 6, the U.S. Department of Labor released its final proposal requiring retirement advisors to adhere to a fiduciary standard. The final proposal unexpectedly added restrictions to the sale of American Equity Investment Life Holding’s primary product, causing the shares to decline by 15% on the day of the announcement. We increased the Fund’s position as we believe there is value in the company’s in-force business and that management will adjust to the new regulations.

Strong stock selection in the basic industry sector contributed to the Fund’s performance during the quarter. Olin — a chemical company that produces chlorine and caustic soda (as well as its associated chemical derivative products) — gained 44% during the quarter. Sentiment was negative around the company during the quarter, as many expected that management would lower its 2016 guidance. On the first quarter earnings call, company management maintained 2016 guidance and provided a more constructive outlook for its chemicals business. The company projects it will realize synergies from the Dow Chemical Company’s business acquisition at the high end of the guided range, and that higher electrochemical unit (ECU) prices could provide upside to 2016 results.

SM Energy is an independent oil and gas exploration and production company with operations in the Permian Basin, Eagle Ford shale, and Bakken shale areas. The stock rose 44% during the quarter as the price of oil recovered from the multi-year lows seen in February. Additionally, the company has maintained disciplined capital spending as it aims to spend within cash flow. Management has stressed that the company’s only need for external capital would be if it found a large, accretive acquisition of producing properties. We maintained the Fund’s position as we believe the company has a strong balance sheet and trades at an attractive valuation based on its core areas of operation.

Shares of veterinary services and diagnostic company VCA appreciated 17% during the quarter. The company raised its full-year revenue and earnings outlook in April after a strong start to the year in both its core animal hospital and laboratory testing businesses. While fundamental trends remain strong at VCA, we reduced the Fund’s position during the quarter as we believe that the stock is approaching fair value.


Labor markets continued to strengthen during the second quarter with the June unemployment rate reported at 4.9%. It’s important to note that the labor force participation rate has improved in 2016, which should bode well for economic growth. Consumer confidence remains healthy and, while not robust, consumer spending continues to grow.

In a reversal to recent years, value is outperforming growth this year. Headwinds to the oil and oil-related industries have begun to ease as the price of oil (WTI Crude) has appreciated by about 30% this year. The healthcare sector is underperforming this year as biotechnology stocks have sold off. In addition, the consumer services sector is underperforming. Both of these sectors have larger weightings in the growth benchmarks versus the value benchmarks. The economic environment seems to indicate that this relative style performance may continue.

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. Defensive sectors, including REITs and utilities, remain less attractive to us on a relative valuation basis. This year, investors have continued to invest in these higher-yielding sectors, which has pushed stock prices even higher and valuations further out of line. As a result, we remain underweight these 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 repurchasing shares or increasing dividends. 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 the first half of 2016. If the market remains choppy, 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 09/26/2016)

Institutional ClassPriceNet change
Max offer price$54.87n/a

Total net assets (as of 08/31/2016)

$3.0 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 08/31/2016)
RatingNo. of funds
3 Yrs4370
5 Yrs4332
10 Yrs4214
Morningstar categorySmall Value

(View Morningstar disclosure)

Morningstar ranking (as of 08/31/2016)

YTD ranking59 / 457
1 year72 / 436
3 years77 / 370
5 years123 / 332
10 years53 / 214
Morningstar categorySmall Value

(View Morningstar disclosure)

Lipper ranking (as of 08/31/2016)

YTD ranking38 / 869
1 year78 / 844
3 years190 / 714
5 years246 / 615
10 years159 / 424
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