Royce Fund 2016 Review and Outlook
article , video 07-20-2016

Royce Total Return Fund 2016 Review and Outlook

Portfolio Manager Jay Kaplan discusses his outlook for Royce Total Return Fund and why the Fund differs in its strategy from other dividend-paying products. 


Royce Total Return Fund 2016 Performance Review and Outlook

2016's Total Return performance has come from a couple of places. It's pretty interesting. One is healthcare, where we've been underweight for a very long time.

Over the last couple of years, that was hurtful. This year, that was pretty helpful so that's good. Our cyclical exposure, which we've also had for a while has finally turned the corner, and that was a pretty good thing this year.

Our energy stocks, although not great, way outperformed those in the Russell. That's good. And our consumer stocks also were positive performers and they also outperformed the stocks in the Russell. So altogether, it was pretty broad and a good performance in the first half of the year.

Outlook for 2016

So my expectation is that the second half, plus or minus, probably may not get a whole lot of performance and maybe we’ll end up near where we are now. But I suspect that because of the uncertainty in the world, the trepidation around world events, all the activity that's going on in markets here and abroad, there’s going to be a lot of churning.

There's going to be a lot of volatility. There may be some panic along the way. But we're going to stick to our strategy. We're going to buy lower volatility, higher dividend paying stocks, try and work on risk, and hopefully at the end, we’ll have a result that's still a nice, positive result for the year.

How Does Total Return Differ From Other Dividend Paying Approaches?

Total Return differs in a very important way from other products that emphasize dividends. Many times, those products are chasing the highest available dividends. So they wind up owning many utilities, many REITs, many master limited partnerships.

They often are owning companies where the dividends are high and are at risk, so they're taking a lot of risk. Our strategy is not like that at all. We’re actually looking for total returns that happen to pay a dividend along the way.

So you'll find us light in utilities, REITs, and MLPs. But you’ll find us in more mature, stable, cash flow-generating businesses, where the management teams are very shareholder-focused and they return capital to shareholders. And we think we can we can take those dividends, and wind up with pretty good risk-adjusted returns.

Important Disclosure Information

Average Annual Total Returns as of 6/30/2016 (%)

Total Return 3.28 8.62 0.07 6.32 7.68 6.16 9.54 10.46 12/15/93
Russell 2000 3.79 2.22 -6.73 7.09 8.35 6.20 7.61 8.47 N/A
Annual Operating Expenses: 1.22%

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

The Fund invests primarily in small-cap and micro-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 (measured at the time of investment) in securities of companies headquartered in foreign countries, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing Foreign Securities" in the prospectus.)

The thoughts and opinions expressed in the video are solely those of the persons speaking as of July 12, 2016 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.

Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell© is a trademark of Russell Investment Group. The Russell 2000 Index is an index of domestic small-cap stocks that measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

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. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)



Sign Up