article , video 09-28-2015

Why Consider Royce Global Financial Services Fund?

CEO and Portfolio Manager Chuck Royce talks about taking a non-traditional approach to investing in financials and how we try to benefit from both secular trends and our own insights as asset managers.

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"To me it's very simple—financial services are a critical part of our economy. The observation we made many years ago is that the financial services funds typically are associated with banks. Our firm's observation is that the world is much more diverse than that, especially in the small- and mid-cap space.

"We started out with a completely different premise—we had a long history with investing in asset managers. In general, we use the asset-light model as a preferred model. So in the insurance world, we would invest in insurance brokers. In the world of exchanges, exchanges are typically acting as a clearing mechanism for people to conduct business. We've invested around the world in exchanges.

"We believe that there has been significant opportunity in the non-U.S. world, so we've carried our interest in certain business models to around the world. We've invested in wonderful global companies located in the U.S., London, Switzerland, and this has become a very critical part of how this Fund invests. We've been very happy with that, and that will continue to be one of its signatures.

"There is a variety of new developments in the asset management world and in the banking world. Traditional banks are subject to more and more regulations. There has evolved to be a non-bank lending world that is coming on us right away. BDCs are a perfect example of that, and we're investing in BDCs and in BDC managers.

"In the asset management world, we are looking very closely at private equity firms which have much longer lives than traditional asset managers, and we've found very favorable total return opportunities there."

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.

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 Global Financial Services Fund invests primarily in equity securities of companies with stock market capitalizations up to $5 billion that are "principally" engaged in the financial services industry. The Fund is not a complete investment program. It is designed for long-term investors who can accept the risks of investing in a fund with common stock holdings primarily in financial services small-cap and mid-cap companies. Therefore, the Fund is subject to certain risks associated with the industry, including, among other things, changes in government regulations, interest rate levels, and general economic conditions. 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.) As of 6/30/15 the Fund invested a significant portion of its assets in a limited number of stocks, which may involve considerably more risk than a more broadly diversified portfolio because a decline in the value of any of these stocks would cause the Fund's overall value to decline to a greater degree. The Fund may invest up to 50% 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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