article 07-20-2015

Francis Gannon on Asset.tv's Mid-Year Equity Update

In a small-cap market that has largely been led by low-quality companies, Co-CIO Francis Gannon believes the current environment calls for a return to a more risk-oriented, fundamental approach to investing.

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"We've lived in a world where companies that are loss makers, that have negative EBIT, have actually outperformed now for a period of time," said Co-Chief Investment Officer Francis Gannon on Asset.tv's "Mid-Year Equity Outlook 2015" Masterclass. "Risk is something I think we've forgotten about in a market that, on a quarterly basis, seems to hit new highs."

On July 9, 2015, Francis—joined by Dodd Kittsely, head of ETP strategy at Deutsche Asset & Wealth Management, and Frazer Rice, managing director, wealth advisory services at Wilmington Trust—sat down with host Trish Regan to discuss a number of topics at the fore of many investors' minds, including the fate of Greece, China's bear market, and international investing today, sectors that currently look attractive in a higher interest rate environment, the prospects for CAPEX, and more.

"I think in the United States you're on a road to normalization, which is something we haven't seen," said Francis. "And what does that mean? From our perspective in the small-cap space, you're going to see lower returns from a market perspective."

Francis Gannon has 22 years of investment industry experience, eight of which at Royce. 

Important Disclosure Information

The thoughts and opinions expressed in this piece 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. Investments in securities of small-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see "Primary Risks for Fund Investors" in the prospectus.) Investments in foreign companies may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see "Investing in International Securities" in the prospectus.) Therefore, the prices of the securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of the securities of U.S. companies.

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