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  • A positive outlook for merger and acquisition activity
    opportunities We believe corporate profit margins have potentially reached a plateau for many industries As a result companies may have fewer organic growth opportunities to enhance their earnings In such an environment acquisitions could be a high priority for companies seeking increased sales economies of scale and operating leverage Improved economic climate After slowing in 2012 global economic growth appears to be stabilizing at low levels entering 2013 We believe this provides a satisfactory backdrop for M A activity Strong corporate balance sheets Companies are looking to make better use of historically large cash hoards see the chart below which earn virtually no return currently due to the zero interest rate policy of the Federal Reserve Corporate cash holdings are above levels last seen since the 1980s Source Ned Davis Research Dec 2012 Charts are for illustrative purposes only and are not representative of the performance of any specific investment Past performance does not guarantee future results U S companies may proceed cautiously Although we believe M A activity is likely to increase U S companies could proceed cautiously due to uncertainty over U S fiscal policy and sustained global economic strength Resolution of ongoing fiscal policy matters and continuing signs of economic strength could likely spark significant M A activity Positioned to benefit from M A activity We currently hold companies that in our view generate strong free cash flow and have healthy balance sheets Historically those types of businesses often benefit disproportionately from M A activity while retaining the financial resources to return money to shareholders through dividend increases debt pay downs and share repurchases The views expressed represent the Manager s assessment of the market environment as of March 2013 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 current 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 Investments in small and or medium sized companies typically exhibit greater risk and higher volatility than larger more established companies All third party marks cited are the property of their respective owners Christopher S Beck CIO Small Cap Value Mid Cap Value Equity View bio More from Christopher S Beck M A activity s record year Reasons for continued optimism Recent market volatility has implications from Shanghai to D C Corporate spending tilted toward shareholder friendly activities See all from this author See all from this team Christopher S Beck biography Christopher S Beck CFA Senior Vice President Chief Investment Officer Small Cap Value Mid Cap Value Equity Christopher

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/positive-outlook-for-merger-and-acquisition-activity (2016-04-26)
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  • Municipal fixed income markets: First quarter review
    87 and Housing 0 81 High Yield Tobacco was the strongest overall performing sector for the period returning 2 49 for the quarter Supply for the first quarter of 2013 was 81 billion representing a 2 increase as compared to the same period last year Source Municipal Bond Buyer Outlook We are aware that as always there are many moving parts to the market We are closely watching the fiscal negotiations in Washington in regards to both the cap on exemptions and the effect of sequestration or any replacement budget cuts on municipal finance We are also closely watching the domestic economy as well as the developments in Europe and other global economies In addition we are following the developments in Puerto Rico and we continue to be diligent on our credit surveillance We took a more cautious approach to the first quarter allowing our security selection and focus on income to help drive performance We must now evaluate the ability of these lower rated securities to potentially outperform if yields keep rising We believe credit can still outperform if rates rise modestly and in an orderly fashion We also believe credit can outperform due to its income feature if rates stay range bound We currently favor credit exposure over yield curve exposure During the late fourth quarter of 2012 and early first quarter of 2013 we reduced some of our yield curve exposure which was beneficial to performance At this time we do not anticipate adding curve exposure back to the portfolios Additional statistics at the state level briefly noted State specific developments noted below are based on information published by each state s respective budget authorities and supplemented by sources that include Standard Poor s the National Conference of State Legislatures the U S Labor Department and the National Association of State Budget Officers Idaho s unemployment rate declined in recent months reaching 6 2 in February 2013 lower than the U S national rate The governor signed a 2 7 billion 2013 General Fund budget into law in April 2012 For the first nine months of fiscal 2013 general fund revenues totaled 1 84 billion This is 3 6 above the prior year and 1 2 more than projected Individual income taxes were on budget while corporate and sales taxes were 3 8 and 1 6 respectively above estimates Although down from its prior highs Arizona s unemployment rate increased slightly to 7 9 in February 2013 The fiscal 2013 8 57 billion General Fund Budget represents a 0 6 increase from fiscal 2012 For the first eight months of fiscal 2013 General Fund revenues totaled 5 7 billion This is 4 4 above the prior year and 0 3 above forecast Year to date sales taxes are 4 5 higher than the prior year and 0 3 above projections Personal income taxes are 8 4 higher than the prior year and 0 5 above estimates Corporate taxes are down 10 5 and are 2 9 below forecast Minnesota s unemployment rate was 5 5 in February 2013 significantly lower than the national rate According to the state s February forecast general fund revenues for the 2012 2013 biennium are expected to exceed November estimates by 217 million General Fund spending is projected to be 63 million below earlier estimates This improvement reflects gains from fiscal 2012 and spending savings in K 12 education debt service and property tax aid These forecast changes produce a 295 million balance for the end of the biennium This will be allocated to buy back some of the outstanding school aid payment shifts amounting to 1 1 billion After this buyback 801 million of school aid shifts will remain The state s November forecast for a 1 09 billion deficit for the 2014 15 biennium has been reduced to 627 million Revenues are now forecast to be 36 1 billion 0 9 more than earlier estimates and spending is expected to be reduced by 117 million 0 3 to 36 74 billion The unemployment rate in Colorado has continued to improve in recent months to 7 2 in February 2013 According to the March economic update General Fund revenue for the current fiscal year is expected to be 2 8 higher than forecasted in December Overall general fund revenue is expected to grow 7 1 in fiscal 2013 After accounting for a one percent increase in the reserve level the state will have excess reserves of 959 3 million All excess reserves will be transferred to the State Education Fund New York s unemployment rate totaled 8 4 in February higher than the national rate of 7 7 Lawmakers signed off on a 135 1 billion All Funds Fiscal 2014 Budget that closed a 1 3 billion gap with no new taxes or fees and actually cut taxes for businesses It contains cost control measures to keep agency operations spending on par with fiscal 2013 and benefits from some favorable trends in healthcare costs Fiscal 2013 ended March 31st revenues are expected to be 226 million less than projected but 3 1 greater than fiscal 2012 Local assistance and other expenses are greater than expected but debt service savings reduction in capital spending and a large settlement with Standard Chartered Bank should offset these negative developments In California the unemployment rate totaled 9 6 in February but continues to improve month over month Governor Brown signed a 91 3 billion 2013 General Fund Budget into law on time that closed a 15 7 billion budget gap through revenue increases and expenditure cuts Revenues for the first nine months of fiscal 2013 are currently running 15 5 above the prior year figures and 7 8 above budget Part of this is due to the temporary increases in personal income and sales taxes Individual income taxes are coming in 28 7 higher than the prior year and 12 above budget estimates Sales taxes are similar to last year but 2 4 below expectations

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/municipal-fixed-income-markets-first-quarter-review-2 (2016-04-26)
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  • Grillo's Corner: The Great Central Bank Roller Coaster, Part III
    outgrowth of Fed policy moves that attempted to smooth out economic growth What hasn t been discussed enough in my opinion is that the asset price swings are creating volatility in U S tax revenue streams Jim Bianco of Jim Bianco Research LLC is one of the few analysts who have looked at this aspect of the troubling asset price bubble environment The chart above depicts swings in capital gains revenue that are indicative of a volatile tax base This is akin to the financial company model that uses leverage and trading revenue to generate its earnings stream In this model the financial company exists as a more volatile franchise which usually carries higher risk premiums attached to both its equity and its debt financing So far we have not had to endure big risk premiums for our country s debt However we have witnessed a recent downgrade to the nation s debt perhaps with further negative action to follow Outlook for markets Our final thought is on the near future of the markets Several central banks have taken cues from the Fed and begun applying QE measures Many markets have been influenced by this huge medication At some point and it may have started already the cheap financing from this liquidity may lead to increases in economic activity At that point the proponents of QE measures snake oil salesmen and charlatans in my opinion could make the same questionable pronouncements they have about past economic surges That is they could declare that such activity is healthy and naturally occurring and has longevity Unfortunately these pronouncements may influence many an investor Additionally other investors may have learned a different lesson that central banks will always bail them out See graph below We will monitor leverage indicators carefully in the coming months If there are signs of further deleveraging we believe it will make for a sustained and healthier adjustment but come at a cost to near term growth in our opinion If however investors and shadow bankers are emboldened by this ample liquidity and decide to increase leverage we believe it could potentially lead to another shockwave event in the financial market If the graph below is any indication we may have cause for concern Investors belief that central banks will continue providing bailouts may increase their appetite for leverage Source Zero Hedge from The CFA Institute January 2013 The chart above is for illustrative purposes only and is not representative of the performance of any specific investment Past performance does not guarantee future results Information is as of the date indicated and subject to change An increase in debt to GDP in the U S and other developed countries could lead to an asset bubble and possibly another shockwave event Source Ned Davis Research as of October 2012 Latest data available The chart above is for illustrative purposes only and is not representative of the performance of any specific investment Past performance does not guarantee future results Information is

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/grillos-corner-3 (2016-04-26)
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  • Stock market valuations may be fully priced, but opportunity for value remains
    A secular bear market is typically recognized as an extended period in which stock prices are either flat or generally trending downward Secular bear markets can last a long time it s not uncommon to see them extend beyond 10 years Data Ned Davis Research February 2013 Chart is for illustrative purposes only and is not representative of the performance of any specific investment Past performance does not guarantee future results Information is as of the date indicated and subject to change 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 An index is unmanaged and one cannot invest directly in an index Index performance returns do not reflect any management fees transaction costs or expenses The price to earnings ratio or P E ratio is a valuation ratio of a company s current share price compared to its earnings per share GAAP refers to generally accepted accounting principles All third party marks cited are the property of their respective owners Positioning In light of our outlook we remain focused on shares of companies that appear demonstrably undervalued to us and that have in our assessment characteristics such as the following strong cash flows manageable debt levels diversified businesses good dividends In our view these represent some of the more favorable investment opportunities in the current environment because we believe they may hold up comparatively well and may have the potential to produce competitive total returns in a market upturn Consult your financial advisor to learn more about the potential benefits as well as the risks of value equity investments and to determine whether they may be suitable for you The views expressed represent the Manager s assessment of the market environment as of March 2013 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 current 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 Investors should not place undue reliance on forward looking statements as a prediction of actual results In addition we disclaim any obligations to update any forward looking statements to reflect events or circumstances that occur after the date of this document Value investing focuses on buying stocks that are trading at bargain prices based on fundamental analysis then holding them until they become fully valued Typically value investors select securities with lower than average price to book or price to earnings ratios and or

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/stock-market-valuations-may-be-fully-priced (2016-04-26)
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  • Political change brings new optimism in Japan
    These conditions may underpin a structural improvement in nominal growth and profitability across the economy Coupled with weak market expectations and price to book valuations that are among the lowest in the developed world these improvements could drive significant equity market strength Data MSCI We would also however note the following caveats amid this potentially more constructive country outlook Japanese demographic trends weak birth rates along with an aging population limit the country s potential to grow The Japanese fiscal picture is sobering at best with a primary budget deficit of 9 of gross domestic product GDP a measure of all goods and services produced in the country and an overall government debt to GDP ratio higher than 200 Deficit data ISI Group Debt to GDP ratio data MSCI Japan s low valuation on book value has been accompanied by chronically weak profitability To the extent that this condition remains linked to poor corporate governance it will likely remain a drag on the country s performance In sum while we take no position on the ultimate prospects for success of the government s initiatives we remain alert to the opportunities that such changes may represent to strong companies with favorable valuations within our value universe As always we believe that a successful company will succeed on the strength of its management the competitiveness of its productive asset base the quality of its balance sheet and the structure of its global market positioning The location of the company s domicile is less important to us than its real underlying risk exposures The views expressed represent the Manager s assessment of the market environment as of January 2013 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 current 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 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 Investors should not place undue reliance on forward looking statements as a prediction of actual results In addition we disclaim any obligations to update any forward looking statements to reflect events or circumstances that occur after the date of this document Ned A Gray CIO Global and International Value Equity View bio More from Ned A Gray A selective approach to value investing Despite macro pressures in

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/political-change-brings-new-optimism-in-japan (2016-04-26)
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  • Potential portfolio impacts of a rising rate or inflationary environment — international equity
    the price that may be charged to customers the regulator typically ensures that the regulated company is able to earn a return in excess of its cost of capital including permitting the regulated company to raise its tariffs in future years by a level linked to the inflation rate Thus regulated entities are able to generate a revenue stream that should grow at least in line with inflation These kinds of contractual inflation linked revenue bases provide infrastructure investments including many of those within our portfolios with a very direct inflation hedge The views expressed in each outlook represent the Manager s assessment of the market environment as of January 2013 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 current views The views expressed in each outlook are general in nature and do not relate to a particular mutual fund IMPORTANT RISK CONSIDERATIONS Investing involves risk including the possible loss of principal 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 Certain statements made here are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 PSLRA A forward looking statement is a statement that is not a historical fact and without limitation includes any statement that may predict forecast indicate or imply future results performance or achievements and may contain words like believe anticipate expect estimate project will shall and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance In particular these include statements relating to future actions trends in our businesses prospective services or products future performance or financial results and the outcome of contingencies such as legal proceedings The protection afforded by the safe harbor for forward looking statements provided by the PSLRA is claimed hereunder Due to the uncertainty inherent in forward looking statements actual results or economic conditions may differ materially from those anticipated in the forward looking statements Investors should not place undue reliance on forward looking statements as a prediction of actual results In addition we disclaim any obligation to update any forward looking statements to reflect events or circumstances that occur after the date of this document 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 Nondiversified funds may allocate more of their net assets to investments in single securities than

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/outlooks-potiental-porfolio-impacts-rising-rate-or-environment-intl-equity (2016-04-26)
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  • Potential portfolio impacts of a rising rate or inflationary environment — domestic equity
    represent the Manager s assessment of the market environment as of January 2013 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 current views The views expressed in each outlook are general in nature and do not relate to a particular mutual fund IMPORTANT RISK CONSIDERATIONS Investing involves risk including the possible loss of principal 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 Certain statements made here are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 PSLRA A forward looking statement is a statement that is not a historical fact and without limitation includes any statement that may predict forecast indicate or imply future results performance or achievements and may contain words like believe anticipate expect estimate project will shall and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance In particular these include statements relating to future actions trends in our businesses prospective services or products future performance or financial results and the outcome of contingencies such as legal proceedings The protection afforded by the safe harbor for forward looking statements provided by the PSLRA is claimed hereunder Due to the uncertainty inherent in forward looking statements actual results or economic conditions may differ materially from those anticipated in the forward looking statements Investors should not place undue reliance on forward looking statements as a prediction of actual results In addition we disclaim any obligation to update any forward looking statements to reflect events or circumstances that occur after the date of this document Investments in small and or medium sized companies typically exhibit greater risk and higher volatility than larger more established companies 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 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 Funds may also be subject to prepayment risk the risk that the principal of a fixed income security that is held by the Funds may be prepaid prior to maturity potentially forcing the Funds to reinvest that money at a lower interest rate Information is as of the date indicated and

    Original URL path: http://www.delawareinvestments.com/individual-investors/literature/insights/2013/outlook-potential-portfolio-impacts-of-a-rising-rate-or-inflationary-environment-domestic-equity (2016-04-26)
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  • The long-term need for global infrastructure
    world gross domestic product GDP per year through 2030 or about US 71 trillion annually Need for private sector funding A shortage of capital continues to strain government budgets the traditional source of funding for new infrastructure projects Private sector funding is needed especially in developing countries which depend on improved infrastructure to support their growing economies Source Organization for Economic Cooperation and Development OECD as of October 2012 Most recent data available GDP is a measure of all goods and services produced in the country According to the OECD investment in infrastructure spending is expected to increase substantially through 2030 making listed infrastructure a ripe asset class for growth potential in the coming decades Source OECD 2009 Infrastructure to 2030 Most recent data available OECD is a Paris based international economic organization of 30 countries Most OECD members are high income economies with a high Human Development Index and are regarded as developed countries The Human Development Index is an alternative to simple money metrics It is an easy to understand numerical measure made up of what most people believe are the very basic ingredients of human well being health education and income It is used in a number of countries as an official government statistics Views expressed were current as of December 2012 are subject to change and may not reflect the manager s current 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 Investing involves risk including the possible loss of principal International investments entail risks not ordinarily associated with

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