Archived Material: Important Performance Information

Archived material may contain dated performance, risk and other information; please view returns as of the most recent quarter end and month end. Due to changing circumstances over time, statements made in archived material may or may not have continued applicability or relevance in today's environment. Any thoughts concerning market movements and future prospects for small-company stocks are solely those of Royce & Associates, LLC, and, of course, there can be no assurance with regard to future market movements. Small- and micro-cap stocks may involve considerably more risk than larger-cap stocks.

All performance information reflects past performance, is presented on a total return basis and reflects reinvestment of distributions. Current performance may be higher or lower than performance quoted. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares may be worth more or less than their original cost when redeemed. Please read the fund's prospectus carefully and consider a fund's investment goals, risks, fees and expenses before investing or sending money. The prospectus contains this and other information. The Russell 2000, Russell 2000 Value, Russell 2000 Growth, S&P 500, S&P 600, NASDAQ Composite and DJIA are unmanaged indexes of domestic common stocks. Distributor: Royce Fund Services, Inc.

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    1. Advisor Resources
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    2. Trading at Royce & Associates

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      The goal of our trading operation at Royce is twofold—to execute orders for our portfolio managers with as little market impact as possible and to provide our portfolio managers with information on trading activities on those securities that we own or are considering for purchase.

      Our investment approach is strongly oriented towards independent thinking and incorporates a contrarian bent, so we are often important providers of liquidity to the markets in which we transact.

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      "Trading at Royce & Associates"

      A Seasoned Team

      The trading team at Royce is an experienced group of nine professionals with an average tenure of 21 years in the investment business and 11 years at Royce.

      Dan O'Byrne, our Director of Trading, has been with the firm for 24 years. He manages all systems coordination, front-end trading desk compliance and report design. There are eight full-time traders supporting our portfolio managers—three listed traders, three OTC traders, one international trader and one liquidity trader. While every trader has a primary exchange focus, all are capable and experienced at trading both OTC and listed stocks, which allows for appropriate redundancy and back-up.

      Execution

      The trading function at Royce is an integral part of our investment process and one of our key competitive strengths. We have always believed that the entry price is a critical determinant of investment return. As a result, disciplined and intelligent trading, particularly in the smaller company universe where liquidity issues are a regular challenge, is an important opportunity to generate excess return.

      Traders at Royce are assigned to specific portfolio managers, providing continuity in order execution and appropriate familiarity with the trading characteristics of portfolio positions. Importantly, Royce traders are singularly focused on order execution, with no proprietary trading or other responsibilities to draw attention away from their core function.

      An important competitive advantage in the small-cap space is our asset size, which, combined with more than 35 years of experience investing in small-cap companies, puts Royce at the center of trading activity. We are frequently the first call when a large block of stock needs to be traded or timely information is released to the market place.

      Trading in small-cap and micro-cap companies differs from trading in large-caps. Each transaction requires specialization and negotiation in execution. Liquidity, spreads and market depth vary greatly and need to be followed often for days, weeks and even months, not just moments as is generally the case in the large-cap universe.

      At Royce, we patiently trade stocks that are thin, participating only in the appropriate amount of volume so as not to adversely affect the price. As a consequence, it sometimes takes months to build or exit a full position.

      We utilize a proprietary, paperless trading system with two points of entry: a Portfolio Manager Order Entry System and a Trader Order Entry System. These integrated systems allow portfolio managers to enter orders on their desktop PCs and send them directly to their designated trader. Our traders then examine the stock's trading pattern and history, and determine the most efficient means of execution. They use a spectrum of available resources, which range from large Wall Street brokerages to regional boutique firms and electronic trading platforms.

      Trading Partners

      Electronic trading has become an important part of the investment landscape over the past decade. While we do use electronic systems, the bulk of our trades are still negotiated with traditional brokerage firms.

      We use both the large investment houses and small boutiques, along with many high-touch brokers. We also use a large number of smaller regional broker-dealers, some of whom we have been trading with for more than two decades.

      Once again, our scale and volume of transactions means that we are a very important customer to many of these organizations and are given commensurate attention and resources.

      A Competitive Advantage

      Trading in the small-cap area is very specialized, time intensive and an important component of return. Our eight dedicated traders, combined with state of the art systems and programs, allow our portfolio managers to execute large and sophisticated trades with efficiency and minimal price impact.

      Royce's size and exclusive focus on smaller companies enables us to direct substantial resources to our trading effort and by so doing, we believe we may enhance investment performance.

      Important Disclosure Information

      Please read the prospectus carefully before investing or sending money. The prospectus contains information regarding the Funds' respective investment objectives, risk profile, fees and other expenses. The Royce Funds invest primarily in securities of micro-cap, small-cap and/or mid-cap companies, which may involve considerably more risk than investments in securities of larger-cap companies (see “Primary Risks for Fund Investors” in the prospectus). Royce Fund Services, Inc. is The Royce Fund's distributor and a member of FINRA and SIPC.
       

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  • © Royce & Associates, LLC, 745 Fifth Avenue, New York, NY 10151, (800) 221-4268. All rights reserved. Distributor of The Royce Fund and Royce Capital Fund: Royce Fund Services, Inc., a wholly owned subsidiary of Royce & Associates. The Royce Funds are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectuses include investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. View our Policies & Procedures, including, among others, our Sarbanes-Oxley Code of Ethics, Privacy Policy and Proxy Voting Guidelines and Procedures.