Gannon on Bloomberg TV: Volatility's Impact on Small-Cap Stocks
article 09-04-2015

Gannon on Bloomberg TV: Volatility's Impact on Small-Cap Stocks

Co-CIO Francis Gannon sits down with Bloomberg TV "Market Makers" host Erik Schatzker to talk about the recent correction and how increased volatility is a benefit to active small-cap stock pickers.

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"From our perspective you have to look at the small-cap correction as being a normal part of what we do in the small-cap space," said Co-CIO Francis Gannon told Erik Schatzker on Bloomberg TV’s "Market Makers".

After establishing a high late in June, small-caps—as measured by the Russell 2000 Index—have fallen more than 13% so far in August, its biggest correction since March of last year.

When asked why small-cap stocks "aren't doing better" given, relative to larger-cap stocks, their lower exposure to the international markets, Francis reasoned that many corrections in recent history have been primarily driven by economic growth scares, such as the current situation in China and, last year, in the eurozone.

"Volatility is increasing, which we believe is a good thing in the market," said Francis. "As an active manager we'd say that we’re allowed to be increasingly more selective from a price perspective, which we think is very positive," he added.

Francis Gannon has 22 years of investment industry experience. He joined Royce in 2006.

Important Disclosure Information

The thoughts 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.) 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 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It 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.

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