article , video 09-02-2014

Current Opportunities in International Small-Caps

International Smaller-Cos Portfolio Manager and Director of International Research David Nadel tells Co-Chief Investment Officer Francis Gannon where he is finding opportunities in the international small-cap market. 


Francis Gannon: It's been a really interesting year outside of the United States. Where are you finding opportunities today?

David Nadel: There are a lot of places we're finding opportunities. There are huge disparities in valuation around the world, and that's one of the nice features of Royce International Smaller-Companies Fund—there always is a place to invest that's relatively cheap. The BRIC markets have underperformed the broader markets for three straight years now, so there's a lot of opportunity there.

Japan certainly is a target-rich environment for us, also quite inexpensive, trading at about 0.5x sales, trading at a discount to book value as a whole market, with dividend yields that are about twice as generous as they are here.

So I think there are always places to look for value. We have certainly shifted in the International Smaller-Companies portfolio in favor of emerging markets over the last year, as Western Europe has become more expensive, and we've scaled back on some of those investments.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements. There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Royce International Smaller-Companies Fund may invest a significant portion of its assets in foreign companies, which may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see "Investing in Foreign Securities" in the prospectus.) Therefore, the prices of the securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of the securities of U.S. companies. (Please see "Primary Risks for Fund Investors" in the prospectus.) In addition, as of 6/30/14 the Fund held a limited number of stocks, which may involve considerably more risk than a less concentrated portfolio because a decline in the value of any one of these stocks would cause the Fund's overall value to decline to a greater degree. The Fund invests primarily in small-cap and/or mid-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)



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