Delaware Diversified Income Fund (DPDFX)

Finding a good bond fund can be challenging, there are several things to looks for the fund itself. Two of the most important things are the fund management and its long term performance. While investor likes to chase short term performance, over the long term horizon this may not be the right things to do. This next fund is Delaware Diversified Income fund. It is classified as intermediate term bond fund. This DPDFX fund has been one of the best performing funds over the long period time and it is also rated with the highest rating by Morningstar.

Delaware Diversified Income A (Ticker: DPDFX)

The Delaware Diversified Income fund is seeking maximum long-term total return, consistent with reasonable risk. This Delaware Investments fund invests in these four sectors of the fixed-income securities markets: the U.S. investment grade bond, the U.S. high-yield bond, the international developed markets bond and the emerging markets debts. It invests most of net assets (>80%) in fixed-income securities. The fund may hold a substantial portion of assets in cash or short-term fixed-income obligations. It may also use a wide range of hedging instruments. The fund may invest up to 15% of assets in emerging markets.

DPDFX Fund Details

• Fund Inception Date: December 1997
• Ticker Symbol: DPDFX
• CUSIP: 246248744
• Expense ratio: 0.93%
• Load: 4.50%
• Beta (3yr): 1.05
• Rank in category (YTD): 25
• Category: Intermediate-Term Bond
• Lipper Classification: Multi-Sector Income Funds
• Yield: 4.31%
• Capital Gains: 0.00%
• Number of Years Up: 11 years
• Number of Years Down: 2 years

The Delaware Diversified Income fund has returned 1.08% over the past one year and 7.86% over the past 10 years. It had the worst total return in 2008 with -4.21% and its best achievement occurred in 2009 with 25.42%. This fund also has 5 stars rating from Morningstar.

Paul Grillo, the CFA Senior Vice President, has managed this fund since 2001. This fund has a 12b1 fee of 0.30% and a sales load fee of 4.50%. DPDFX fund has 0.93% annual expense ratio. Investor can invest in this fund with $1,000 minimum investment balance for brokerage account and $250 for IRA account. The next investment can be done with $100 or more increment. To open an account with automatic investment plan, you need to have a minimum of $500 with $100 monthly investment. It can be purchased from around 102 brokerages, such as JP Morgan, Raymond James, Merrill Lynch, Edward Jones, TD Ameritrade Inc, Pershing Fund Center, E Trade Financial, Sun Life CPS, etc.

If you are interested in this fund, there are other classes such as Class B (DPBFX), Class C (DPCFX), Class R (DPRFX) and Class Institutional (DPFFX).

This DPDFX fund has a total of 1.083 holdings as of April 30, 2011. With the total assets of $4.11 billion, this fund’s effective maturity is 7.58 years and the fund’s effective duration is 4.92 years. The portfolio composition of this best rated taxable bond fund as of March 2011 is 62.20% in high-grade securities, 22.20% in high-yield securities, 7.90% in international developed and 7.70% in emerging markets. The top sectors are investment grade credits, high yield credits, MBS & CMOs, international developed, commercial mortgage-backed securities, ABS, U.S. Treasury securities, TIPS, and municipal bonds. 

Investment risks include

• Interest rate risk
• High Yield risk
• Liquidity risk
• Foreign issuer risk
• Emerging markets issuer risk
• Foreign currency risk

Disclosure: No Position

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