Investment Strategies | Royce Funds

Investment Focus

Royce offers a collection of distinct small-cap investment strategies and portfolios with different risk/return profiles that aim to meet a variety of investors' needs.

What does each Fund have in common?

  • Active, bottom-up, risk-conscious, and fundamental investment approach
  • Experienced small-cap portfolio managers
  • High active share, significant manager investment

What makes each Fund different?

  • Investment styles that focus on companies with specific attributes including, attractive valuations, premium quality companies, or companies with significant growth potential
  • Investable market caps that range from micro-cap to small-cap to mid-cap
  • Volatility levels and approaches to risk management

Style

Each of our portfolio managers uses an active, bottom-up, risk-conscious, and fundamental investment approach that aligns with one of the following styles.

Value


Emphasizes attractive valuation as one of the primary stock selection criteria
  • Seeks companies trading at a significant discount to Royce’s estimate of the business's worth and/or
  • Statistically inexpensive companies with low price-to-book or price-to-sales ratios

Core


Portfolios in this group use one of two distinct approaches
  • The first focuses on high-quality companies with histories of attractive, sustainable returns on invested capital
  • The second utilizes a combination of our value and growth strategies with selected high-quality companies

Growth


Invests in companies with above-average growth potential driven by organic revenue expansion
  • Seeks businesses benefiting from growth themes/trends
  • Focuses on companies with sustainable competitive advantage

Important Disclosure Information

Royce classifies a Fund as ‘Value’ because it anticipates the portfolio will have a weighted average price-to-book ratio lower than the Fund’s benchmark; as ‘Core’ because it anticipates the portfolio will have a weighted average price-to-book ratio that is similar to, or somewhat higher than, the Fund’s benchmark; or as ‘Growth’ because it anticipates the portfolio will have weighted average estimated EPS growth higher than the Fund’s benchmark.

Market Cap

Market cap defines the size of the companies in each Fund’s primary investment universe.

Micro-Cap


Companies with market caps up to $1B.
  • Stocks may often be inefficiently (and thus attractively) priced
  • May have higher volatility than small-cap or mid-cap stocks
  • More than 2,900 companies*

Small-Cap


Companies with market caps up to $3B
  • Stocks have more research coverage than micro-caps, but also greater liquidity
  • Lower volatility than micro-caps, but higher volatility than mid-caps
  • More than 3,700 companies*

Small/Mid-Cap


Companies with market caps up to $15B
  • Many stocks are established businesses with long histories of steady profitability
  • Lower volatility than micro-cap or small-cap stocks
  • More than 4,400 companies*

* Source: Factset as of 12/31/18

Volatility

Royce Funds fall into one of five volatility levels based on that Fund’s relative volatility compared with its Morningstar peer group.

Low




Below Average




Average




Above Average




High


Important Disclosure Information

Learn More

About Us

Small-cap equity specialists offering mutual funds with distinct investment strategies designed to meet specific investor needs.

Learn more about The Royce Funds

Firm Culture

Our culture aligns the interests of each employee at Royce with those of our Funds’ shareholders.

Learn more about our unique culture

Our History

We’ve been cultivating our unique small-cap focus for more than four decades.

Learn more about our history

Contact Us

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