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  • April housing data a tailwind for economic activity
    housing demand has increased each of the last five years we still have a long runway to reach the pre recession 20 year average of roughly 1 5 million housing starts per year data U S Census Bureau As a result we feel that housing demand will continue to serve as a tailwind for economic activity While mortgage availability remains tight and demand from first time buyers remains somewhat depressed likely partially due to increased student loan debt the strengthening employment outlook generally improving consumer confidence and increasing household formation should continue to support the moderate recovery in housing starts Increases in interest rates would create a headwind to housing demand however we expect any fed funds rate increases to be very gradual and unlikely to derail the recovery in the near term The views expressed represent the Manager s assessment of the market environment as of May 2015 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 Views are subject to change without notice and future assessments may not reflect the Manager s current views Investing involves risk including the possible loss of principal Past performance does not guarantee future results Kent P Madden Portfolio Manager Equity Analyst View bio More from Kent P Madden Trends in consumer spending Growing confidence amid constraints Housing recovery in closer view Sector spotlight Healthcare See all from this author See all from this team Kent P Madden biography Kent P Madden CFA Vice President Portfolio Manager Equity Analyst Kent P Madden is a portfolio manager for the Small Cap Value Mid Cap Value Equity team He joined the team in December 2004 as an equity analyst and was promoted to senior equity analyst in October 2010

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/notes-from-the-desk/2015/april-housing-data-a-tailwind-for-economic-activity (2016-04-26)
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  • Markets cheer a Tory victory in the U.K.
    Tory party has succeeded in reducing the budget deficit significantly by implementing an austerity program that raised taxes cut numerous social benefits to millions eliminated up to half a million public sector jobs and reduced budgets for government departments It now appears that Cameron s party will be able to continue its work unimpededly toward eliminating the budget deficit Cameron s win is likely good news for equity markets as the conservative party has a reputation for being more business friendly than the defeated Labour party We believe companies in the energy financial building and real estate sectors will benefit as the opposition party s threat of higher taxes and stricter financial and electricity sector regulation are no longer on the table Cameron has promised to hold a referendum by the end of 2017 on British membership in the European Union EU While the referendum is two years away the United Kingdom s possible exit from the EU could have consequences for the whole economy including dampening business investment and the country s credit rating Cameron has indicated that he would like Britain to stay within the EU but that changes are needed including changes to the terms of current EU employment and social policies The views expressed represent the Manager s assessment of the market environment as of May 8 2015 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 Views are subject to change without notice and may not reflect the Manager s views The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization Investing involves risk including the possible loss of principal Past performance does not guarantee future results Indices are unmanaged and one cannot invest directly in an index International investments entail risks not ordinarily associated with U S investments including fluctuation in currency values differences in accounting principles or economic or political instability in other nations Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume Margaret MacCarthy Bacon Investment Specialist View bio More from Margaret MacCarthy Bacon The energy sector Unsettled but not in crisis Supportive conditions for value equities in Europe Even after many successes challenges loom in Japan See all from this author See all from this team Margaret MacCarthy Bacon biography Margaret MacCarthy Bacon Vice President Investment Specialist Margaret MacCarthy Bacon is an investment specialist with the firm s Global and International Value team and has worked with the team for more than 15 years She is responsible for representing the team and its philosophy and process to clients Prior to joining Delaware Investments in June 2005 in her current position she worked with the team at Arborway Capital Thomas Weisel Asset Management and ValueQuest TA Bacon was instrumental in taking the team s international product to the sub advisory arena

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/notes-from-the-desk/2015/markets-cheer-a-tory-victory-in-the-uk (2016-04-26)
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  • Brexit: Is it moving markets?
    a gradual downward drag of 0 2 0 3 while also reducing inflation by 0 1 over one year We believe the effects on the British economy could likely be more significant In the medium term we think the Lehman Brothers collapse in 2008 and the pound s 1992 exit from the European Exchange Rate Mechanism make accurate reference points for possible worst case effects on GDP Those events had an estimated effect on Britain s GDP of 3 2 and 2 4 respectively Data for the economic relationships described above Bloomberg In the months ahead we ll be keeping careful watch on developments in Britain as well as doing some advance planning to make sure our portfolio decisions are based on thoughtful evaluation of the more prescient factors We expect to have more to say as market speculation heightens over the Brexit versus Bremain contest Britain s dissatisfaction with the E U British Prime Minister David Cameron has long been skeptical of the E U His Conservative Party has shared the sentiment leading him to pursue changes in the official terms of the U K s membership in the Union Working with E U officials Cameron finalized a set of amendments on Feb 19 The amendments were driven largely by the party s belief that the U K has a brighter future if it has a looser association with the Union This pessimism is based in part on A lack of confidence in the Union s relevance Britain s political integration into the E U is relatively weak Most of the recent decisions made by the European Parliament have had little to do with Britain they have largely focused on issues such as financial rescues for weaker member states and stronger governance within the banking sector Broader collaboration aimed at long term growth has been limited by the E U s fiscal constraints The notion that Britain should limit benefits to migrant workers Cameron s reforms allow Britain to restrict workplace related benefits programs for migrants from other E U countries Concern about membership costs The U K currently pays 10 4 billion a year in fees to the E U and the sum may increase to 13 5 billion between 2016 and 2020 The views expressed represent the Manager s assessment of the market environment as of March 2016 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 Views are subject to change without notice and may not reflect the Manager s views Carefully consider the Funds investment objectives risk factors charges and expenses before investing This and other information can be found in the Funds prospectuses and their summary prospectuses which may be obtained by visiting the fund literature page or calling 800 523 1918 Investors should read the prospectus and the summary prospectus carefully before investing IMPORTANT RISK CONSIDERATIONS Investing involves risk including the possible loss of principal Past performance

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/brexit-is-it-moving-markets (2016-04-26)
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  • Looking ahead at Fed policy: The perils of a strong dollar
    that currency issue is think about all the borrowers around the world who have done their borrowing in U S dollar terms emerging markets for the most part Emerging market debt in many cases because of the dollar strength has been repriced by 5 10 20 30 or more percent It s simply this they owe it in dollars they generate if you will reserves in their own currency and the debt has been marked up by the strength of the dollar That represents a serious challenge to those emerging market economies to be able to service their debt appropriately These are pressures that will continue and the Federal Reserve going off on its own relative to other central banks probably helps to create those pressures The views expressed represent the Managers assessment of the market environment as of March 2016 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 Carefully consider the Funds investment objectives risk factors charges and expenses before investing This and other information can be found in the Funds prospectuses and their summary prospectuses which may be obtained by visiting the fund literature page or calling 800 523 1918 Investors should read the prospectus and the summary prospectus carefully before investing IMPORTANT RISK CONSIDERATIONS Investing involves risk including the possible loss of principal Past performance does not guarantee future results 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 International investments entail risks not ordinarily associated with U S investments including fluctuation in currency values differences in accounting principles or economic or political instability in other nations Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume Quantitative easing is a government monetary policy used to increase the money supply by buying government securities or other securities from the market Quantitative easing increased the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity Roger A Early Executive Director Head of Fixed Income Co CIO Total Return Fixed Income View bio More from Roger A Early In fixed income choosing fundamentals instead of latest trends The waiting game continues Our thoughts on the Fed s ongoing QE program An evolving monetary policy See all from this author See all from this team Roger A Early biography Roger A Early CPA CFA Executive Director Head of Fixed Income Investments Executive Vice President Co Chief Investment Officer Total Return Fixed Income Strategy Roger A Early rejoined Delaware Investments in March 2007 as a member of the firm s taxable fixed income portfolio management team with primary responsibility for portfolio construction and strategic asset allocation He became head of fixed income investments in

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/looking-ahead-at-fed-policy-the-perils-of-a-strong-dollar (2016-04-26)
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  • The aftermath of unorthodox monetary policy
    conditions We ve seen risk premium expand across many sectors of the markets it s now hitting corporations and entities with higher borrowing costs The economy will soon start to feel these higher risk premiums and borrowing costs across many of these entities and you ll see a stepdown in global economic activity That means that the Fed will probably be unable to raise rates further in the future and may have to give us a loosening of monetary conditions as we go forward The views expressed represent the Managers assessment of the market environment as of March 2016 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 Carefully consider the Funds investment objectives risk factors charges and expenses before investing This and other information can be found in the Funds prospectuses and their summary prospectuses which may be obtained by visiting the fund literature page or calling 800 523 1918 Investors should read the prospectus and the summary prospectus carefully before investing IMPORTANT RISK CONSIDERATIONS Investing involves risk including the possible loss of principal Past performance does not guarantee future results 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 International investments entail risks not ordinarily associated with U S investments including fluctuation in currency values differences in accounting principles or economic or political instability in other nations Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume Quantitative easing is a government monetary policy used to increase the money supply by buying government securities or other securities from the market Quantitative easing increased the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity Paul Grillo Co CIO Total Return Fixed Income View bio More from Paul Grillo Fixed income markets Closing out a second year of Fed tightening The painful path of global debt Federal fund rates unchanged for now See all from this author See all from this team Paul Grillo biography Paul Grillo CFA Senior Vice President Co Chief Investment Officer Total Return Fixed Income Strategy Paul Grillo is a member of the firm s taxable fixed income portfolio management team with primary responsibility for portfolio construction and strategic asset allocation He is also a member of the firm s asset allocation committee which is responsible for building and managing multi asset class portfolios He joined Delaware Investments in 1992 as a mortgage backed and asset backed securities analyst assuming portfolio management responsibilities in the mid 1990s Grillo serves as lead portfolio manager for the firm s Diversified Income products and has been influential in the growth and distribution of the firm s multisector strategies Prior to joining Delaware

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/the-aftermath-of-unorthodox-monetary-policy (2016-04-26)
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  • Four questions with the Asian Listed Equities team leaders
    with U S investments including fluctuation in currency values differences in accounting principles or economic or political instability in other nations Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume Investments in small and or medium sized companies typically exhibit greater risk and higher volatility than larger more established companies Index performance returns do not reflect any management fees transaction costs or expenses Indices are unmanaged and one cannot invest directly in an index The MSCI All Country Asia ex Japan Index represents large and mid cap stocks across two of three developed market countries in Asia Hong Kong and Singapore not Japan and eight emerging market countries in Asia China India Indonesia Korea Malaysia the Philippines Taiwan and Thailand The index covers approximately 85 of the free float adjusted market capitalization in each country Britney Lam Investment Strategist View bio More from Britney Lam As China contemplates an exchange tax psychology meets economic reality More quantitative easing China style Market volatility The view from Hong Kong See all from this author See all from this team Britney Lam biography Britney Lam CFA CAIA Investment Strategist Asian Listed Equities Team Macquarie Funds Management Hong Kong Limited Britney Lam joined Macquarie in April 2015 She works closely with the investment team reporting to the head of investments in managing the strategic investment side including macro and policy risks of the Asian Listed Equities strategies at Macquarie Investment Management She has worked as a portfolio manager and equity analyst for more than 12 years in Asia Prior to joining Macquarie Lam was a portfolio manager and research manager at Cathay Conning Asset Management from January 2013 to April 2015 Previously she was the chief investment officer of Omegacy Group Limited a family office based in Hong Kong from November 2011 to December 2012 She has held other portfolio management roles and also worked in the corporate finance department at Goldman Sachs Asia She holds a bachelor s degree in economics from Northwestern University Duke Lo Associate Director Portfolio Manager Asian All Stars Strategy Analyst Asian Listed Equities Team Macquarie Funds Management Hong Kong Limited View bio See all from this author See all from this team Duke Lo biography Duke Lo CFA Associate Director Portfolio Manager Asian All Stars Strategy Analyst Asian Listed Equities Team Macquarie Funds Management Hong Kong Limited Duke Lo is the lead portfolio manager for the Asian All Stars Strategy a role he assumed in 2014 He has nearly 10 years of industry experience Lo began his career at Macquarie in 2006 as an assistant portfolio manager for the Macquarie Japan Market Neutral Fund before taking on the role of analyst in the Asian Listed Equities team in 2008 Prior to Macquarie he worked with IBM as a consultant where he gained experience in the telecommunications and airlines industries He also gained experience in the telecommunications manufacturing and information technology fields as an engineer with Telstra

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/four-questions-with-the-asian-listed-equities-team-leaders (2016-04-26)
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  • M&A activity’s record year: Reasons for continued optimism
    capitalized and their loan portfolios have been growing Many banks are interested in lending money to companies making acquisitions as long as the companies are not being saddled with excessive debt The political environment Election years bring uncertainty regarding the potential regulatory environment Companies may feel that it is best to act before there is any change in leadership Setting the stage at the portfolio level As portfolio managers our investment process favors companies that generate strong sustainable free cash flow Companies that generate strong free cash flow have traditionally been viewed as more likely acquisition candidates due to the potential financial accretion to the acquiring company While a company s potential as an acquisition candidate is not a catalyst in our investment decisions when one of our holdings is pursued by a bidder we generally view it as a positive event in a sense it confirms our initial assessment of the company s attractiveness Several such events have played out in the recent past among the companies that we own in our portfolios seven were acquired during 2015 Speaking of portfolio holdings that become acquisition candidates it s not preordained that we will hold them through the closing of each deal We may do so in certain cases but in other cases we may sell takeover candidates from our portfolios before the deal closes Sometimes we may decide that a company s shares are trading at a notable exit point even if the deal isn t scheduled to close for some time In other situations however our assessment may indicate that shares have the potential to appreciate after the deal is finalized making it sensible to remain invested in the stock In large part the decision to exit a position depends on fundamental and financial factors that are specific to each deal Looking forward we believe that the outlook for M A remains favorable as companies continue to seek ways to put excess cash flow to work for the benefit of shareholders Why emphasize free cash flow By its textbook definition a company s free cash flow is the amount of cash it generates after subtracting expenses related to maintaining or expanding its core operations This category of expenses typically includes large scale endeavors like acquiring new equipment repairing older facilities and pursuing new lines of research and development We believe a company s free cash flow provides exceedingly reliable evidence of its ability to generate cash offering a level of clarity and insight that is not always matched by other traditional indicators The views expressed represent the Manager s assessment of the market environment as of January 2016 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 Views are subject to change without notice and may not reflect the Manager s views Carefully consider the Funds investment objectives risk factors charges and expenses before investing This and other information can be found

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/ma-activitys-record-year-reasons-for-continued-optimism (2016-04-26)
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  • Fixed income markets: Closing out a second year of Fed tightening
    Brazil 12 48 39 97 Euro Stoxx Index euro zone 3 50 6 13 FTSE 100 Index United Kingdom 4 74 9 02 CAC 40 Index France 8 08 1 98 DAX Germany 8 65 1 46 IBEX 35 Index Spain 7 07 15 72 S P ASX 200 Australia 3 76 14 51 Data Bloomberg Analytics Data accessed on or about Dec 29 2015 The liquidity reversal hit the high yield bond market particularly hard For 2015 the sector declined by 3 5 on a total return basis Risk premiums widened by 185 basis points Today defaults are starting to rise after a notable period of low levels The high yield troubles were centered in the energy and metals and mining sectors However other commodity related companies saw their bond prices decline as well We also witnessed an increase in idiosyncratic credit events outside of these sectors Real world consequences Fittingly individual investors and their advisors are concerned about the events outlined above The second half of 2015 was marked by outflows from bond and equity mutual funds Outflows were very likely driven by investors who were concerned about liquidity as well as the outlook for returns in a rising rate environment Funds that had significant exposure to less liquid investments are now starting to either gate withdrawals or shut down altogether in order to prevent a disorderly wind down Markets are beginning to see the ramifications of this new environment as the pressures have trickled down to asset managers The squeeze has applied particularly to portfolios that contain illiquid investments which can be problematic in an environment of heavy investor withdrawals All in all we believe episodes like these should be taken as wake up calls to fiduciaries reminding them about the daily liquidity challenges We think it bears repeating that all of this market turbulence and volatility comes in the midst of a pernicious environment of low liquidity the contours of which we highlighted in Grillo s corner The four horsemen Macro prudential rules and regulations that were designed to make deposit taking institutions safer have thinned out their trading portfolios Most of the marginal risk has now been shifted to mutual funds exchange traded funds and sovereign wealth funds as well as currency reserve entities The reduction in liquidity together with the higher rate regime is forcing significant selling pressure onto these entities Currency reserve managers have been forced to sell U S Treasury investments so that they can defend their currencies against further declines or a disorderly sell off The reduction in oil and other commodity revenue for many developing nations has forced them to sell sovereign wealth fund assets These pressures may intensify in 2016 if the Fed continues its interest rate hiking cycle That would put billions of dollars of fixed income investments at risk for further selling pressure A hangover into 2016 We believe we could be heading into another challenging year if the Fed continues the tightening regime it has pursued

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2016/closing-out-a-second-year-of-fed-tightening (2016-04-26)
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