Commitment. Discipline. Consistency.
Introducing Royce & Associates, LLC

History and Background

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"Commitment. Discipline. Consistency."

Focus

At Royce & Associates, smaller company investing is our primary business. We devote the bulk of our time and resources to this endeavor. This distinguishes us from most other asset management firms.

Size

Royce & Associates is among the largest firms in the country that focus exclusively on smaller company investing. Our professional staff includes more than 25 portfolio managers, assistant portfolio managers and analysts, and nine traders.

Experience

Our firm and founder enjoy a rich history that dates back more than 35 years. Our founder, President and Chief Investment Officer, Charles Royce, was among the first professional investors to apply a value approach to the small-cap universe and then build a business around it.

In addition to Chuck Royce, more than 10 members of our investment staff each possess 20 years or more of investment industry experience.

Royce Today

Based in New York City and a wholly owned subsidiary of Legg Mason, Inc., we have grown into one of the industry's premier small-cap asset managers with more than $40 billion under management. More recently, we have expanded our capabilities to include smaller non-U.S. and mid-cap companies.

Our goal is to offer institutional and individual investors the best available micro-cap, small-cap and/or mid-cap portfolios. Currently we manage open-end mutual funds, closed-end portfolios and variable annuity products, as well as several commingled institutional accounts and hedge funds.

We believe that it's important to have a financial as well as an intellectual commitment to our work. We recognize the significance of aligning our interests with those of our shareholders so that when they do well, we benefit; when they do less well, we share the same consequences. Our officers, employees and their families have more than $100 million invested in our funds.

Smaller Companies

The domestic universe of small-cap and micro-cap companies is both large and diverse. Once regarded as highly volatile and viewed opportunistically from an investment standpoint, these companies have grown into an accepted asset class, one used by institutions, consultants, advisors and individual investors. Currently, we invest primarily in companies with market capitalizations up to $5 billion. We divide our universe into three segments—micro-cap, small-cap and mid-cap companies. As a group, they comprise approximately 90% of all publicly traded companies in the U.S. and represent almost $5 trillion in total market capitalization. The ongoing evolution of smaller companies, including the entrance of new companies and IPOs, make our universe an evergreen source of investment opportunities. In addition to its sheer size, the small-cap and micro-cap universe has also been known for its above-average long-term investment results.¹

Micro-Cap

Market Caps up to $500 million
The micro-cap segment is comprised of more than 3,100 companies with approximately $300 billion² in total capitalization. It offers many choices, but presents greater trading challenges, including limited trading volumes and higher volatility.

Small-Cap

Market Caps between $500 million and $2.5 billion
The small-cap segment encompasses more than 1,100 companies with a total capitalization of more than $1.3 trillion.² It is more efficient, offering greater trading volumes and narrower bid/ask spreads.

Mid-Cap

Market Caps between $2.5 billion and $15 billion
The mid-cap segment includes companies that generally are more established businesses that attract greater institutional interest and therefore enjoy greater liquidity. Royce focuses primarily on those mid-caps with market caps up to $5 billion, a universe of more than 300 companies with approximately $1.2 trillion² in total capitalization.

Our Approach

We Emphasize Risk Management and Long-Term Absolute Returns

We believe that paying attention to risk does not diminish long-term returns. While our universe has historically provided attractive long-term returns, it is also known for its volatility. Therefore, our approach seeks to identify a "margin of safety" for each company in which we invest.

In other words, we assess how much risk we are willing to take in order to achieve our desired goal of strong absolute long-term results. As value-oriented investors, we take a contrary view to the often emotional process of buying and selling stocks. We seek to reduce risk at times when others are ignoring it and to pursue opportunities when others may avoid them in an attempt to capitalize on valuation discrepancies. Our long-term orientation enables us to look beyond the noise generated in the short term and thus better assess a company's value as a business.

We Think Like Owners, Not Renters

We attempt to identify and invest in equity securities of smaller companies that are trading significantly below our estimate of their current worth. We base this assessment on either what we believe a knowledgeable buyer might pay to acquire the entire company, or what we think the value of the company should be in the stock market, taking into consideration a number of relevant factors, including the company's future prospects.

Our bottom-up stock selection process is rooted in a business buyers' approach that focuses on understanding a company's enterprise value. We do not attempt to predict macroeconomic trends. Our work centers on identifying valuation discrepancies, not just statistically inexpensive stocks.

We Focus On Understanding Companies

We typically focus on companies with strong balance sheets, a history of earnings, above-average returns on capital, and the ability to generate free cash flow. We also seek management teams committed to growing their business and whose goals are consistent with those of the company's shareholders. Certain portfolio managers at Royce invest more opportunistically by assuming more balance sheet risk, focusing on turnarounds and special situations, or investing in more growth-oriented companies.

Our basic belief is that the price one pays for an investment makes a significant difference in an investor's long-term returns. Not only does this require patience and discipline, it also takes a thorough understanding of a company's financial and business dynamics.

Wealth of Experience

Royce & Associates is committed to the same smaller-company investing principles that have served us well for more than 35 years. Charles M. Royce, our President and Co-Chief Investment Officer, enjoys one of the longest tenures of any active mutual fund manager. Royce's investment staff also includes Co-Chief Investment Officer W. Whitney George and more than 25 portfolio managers, assistant portfolio managers and analysts, and nine traders.

Meet our Portfolio Managers, Assistant Portfolio Managers and Analysts and Traders.