article , video 11-18-2015

What Makes Royce Smaller-Companies Growth Fund Unique?

Portfolio Manager Chip Skinner describes the approach that he and assistant portfolio manager Carl Brown are using in Royce Smaller-Companies Growth Fund. Our version of a growth portfolio, the Fund uses a distinctive Growth at a Reasonable Price (“GARP”) approach to look for long-term growth opportunities.

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The Smaller Companies Growth Fund is a fund we have had for about thirteen years here at the firm. It is our version of a small-cap growth fund. The style is best characterized as a growth at a reasonable price or GARP fund.

We are looking for companies that we can basically own for a long time, companies that can generate outsized returns for us and our shareholders.

A couple of things that make our product unique: One, we are looking for growth companies, companies that have a long runway of growth that we can own for a long period of time.

Secondly, we are looking for themes or megatrends, areas in the economy, pockets in the economy that are growing at an above average rate. To me, my experience tells me the best place to look for growth is in these faster growing areas. You want to fish where the fish are and these are good places to look.

Often times we try to identify the leader in that theme but also we look around in that neighborhood and see if there are other things that we can own that actually benefit from the same theme.

Finally, one of the things that we do to try to reduce risk and to avoid those portfolio torpedoes is to seek companies that have strong balance sheets and that also have attractive valuations.

I mean, to me, this is a growth fund but we are also trying to protect our downside. We are not going to overreach in terms of valuation. You know, it is a growth at a reasonable price fund.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the person speaking as of September 28, 2015 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 The prospectus includes investment objectives, risks, fees, charges, expenses, and other information that you should read and consider carefully before investing.

Royce Smaller-Companies Growth Fund invests primarily in small-cap and 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.) In addition, 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 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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