4 New Strategic Initiatives
article 02-26-2019

4 New Strategic Initiatives

CEO Chris Clark with an update on our newest strategic initiatives, supporting our goal of driving successful small-cap investment results for our clients.

TELL US
WHAT YOU
THINK

As many of you know, we have taken important steps over the last few years to strategically reposition our small-cap offerings. Our goal in these efforts is to focus the number of strategies we offer while at the same time broadening our base of investment vehicles, making our nearly five decades of small-cap expertise more widely available.

I’m happy to say that this work has borne fruit over the last two years with the launch of two Collective Investment Trusts as well as two new subadvised products sponsored by Legg Mason—the first an ETF and the latter Royce’s first global small-cap product to be made available to Japanese investors.

These newer portfolios build on more than a decade of success sub-advising Legg Mason small-cap portfolios for non-U.S. investors, for whom Royce currently manages more than $1 billion. We are particularly pleased that the Japan portfolio was created specifically in response to demand from that country’s investors, who wanted access to our expertise as a small-cap asset manager.

These actions are closely related to a second initiative—products that reach international investors are consistent with our strategic priorities as the small-cap asset class becomes an increasingly important component in investors’ global asset allocation decisions. When meeting with non-U.S. investors, we see numerous parallels with the work we did through our first two decades managing U.S. small-cap portfolios, introducing what for many domestic investors was a new and unfamiliar asset class.

Royce’s 4 New Initiatives

1. Focusing investment strategies while broadening investment vehicles

2. Expanding our international client base and the awareness of international small-cap opportunities

3. Adding quantitative capabilities to assist in portfolio construction

4. Enhancing ESG analytics to aid in company research

We also find ourselves making similar introductions when meeting with prospective U.S.-based clients as we help them explore the international small-cap asset class, and are very pleased that we’ve seen so much interest in our quality-centric strategy in this exciting and underappreciated space.

Each of these experiences highlights that many of our intermediate-term opportunities have us encouraging clients to think about an asset class outside their home market by using a highly active small-cap approach, which we think will enhance their overall portfolios’ return potential.

I also want to share news of an investment process related initiative that demonstrates our commitment to continuous improvement across our firm: Over the years, we have developed what we regard as a robust quantitative research platform to support our investment professionals. Having already used these tools to enhance the way we screen and understand company fundamentals, we are now deepening these quantitative applications that we use in portfolio construction and risk management. The use of these tools will help us with prudent risk management while also potentially increasing the return potential that comes from highly active, idiosyncratic, and effective stock selection.

Finally, we have recently implemented an ESG research tool that provides comprehensive analytics and visualizations of our portfolios’ ESG exposures both over time and relative to their respective benchmarks, providing insight at the company, sector, and region levels as well as helping us identify potential sources of ESG risk that may otherwise go overlooked.

As always, our goal is to drive successful small-cap investment results for our clients and, in doing so, to be recognized as one of the industry’s preeminent small-cap investment firms. We believe that continually reinforcing our identity as highly active, fundamentally based small-cap specialists is the best way to achieve that goal. We thank you for your continued interest in our firm.

More Small-Cap Perspectives

 

Important Disclosure Information

Mr. Clark’s thoughts concerning recent market movements and future prospects for small-company stocks are solely those of Royce & Associates, LP, and, of course, there can be no assurances with respect to future small-cap market performance.

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. (Please see "Primary Risks for Fund Investors" in the prospectus.)

Share:

Subscribe:

Sign Up

Follow: