article 12-03-2014

"I think there is one key virtue that experience provides—perspective."

We talk a lot about experience here at Royce—we want people to know that our investment staff is very seasoned and experienced; that our portfolio managers, analysts, and traders have multiple decades of small-cap expertise. And my own long-term tenure managing our flagship, Royce Pennsylvania Mutual Fund, receives a fair share of attention across all of our web and print materials.

It’s worth asking what the point of it all is—beyond the obvious fact that spending a long time doing anything is likely to produce at least competence and possibly excellence.

And while that is arguably reason enough for us to tout the four-plus decades we have devoted to disciplined and bottom-up small-cap stock investing, there are also important nuances to the way I encourage everyone at Royce to think about experience.

Of course, aging—at anything—has its downsides, but we have found that certain qualities age very well—and in ways that can be a particular boon to us as asset managers.

I think there is one key virtue that experience provides—perspective. We define perspective as the ability to discern what’s important from what isn’t. It is a mental muscle that, unlike the physical ones, can improve considerably with age, potentially enhancing the intelligence and analytical skills of the talented men and women on our investment staff.

Perspective also acts as a wellspring out of which other attributes of experience flow: Patience, the ability to remain calm in the face of adversity, and the knowledge that the markets are cyclical and so change of one sort or another is inevitable. These qualities allow us to see opportunities that other, less seasoned investors might miss.

The steady cultivation of this sense of what’s most important—in life as well as in investing—is more than simply a compensation granted to those of us who are middle aged or older. It is one of the rare gifts that age bestows, but only if we make good use of it. That is something we try to do each day here at Royce.

Important Disclosure Information

Chuck Royce is Chief Executive Officer and a Portfolio Manager of Royce & Associates, LLC, investment adviser to The Royce Funds. Mr. Royce's thoughts and opinions in this piece are solely his own 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.

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 Pennsylvania Mutual Fund invests primarily in small-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. The Fund may invest up to 25% of its net assets in foreign securities (measured at the time of investment), which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing in Foreign Securities" in the prospectus.)



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