David Nadel in NY Times: "Boring can be beautiful."
article 01-11-2016

David Nadel in NY Times: "Boring can be beautiful."

Portfolio Manager David Nadel offers insights into international small-cap stocks in The New York Times.

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“I’m not big on predictions, but the stage is set nicely for investing internationally… Dividend yields are over twice as generous outside the U.S,” said David Nadel in The New York Times article “After a Tumultuous Year for Investors, the Experts Look Ahead.”

Pulitzer Prize-winning columnist James Stewart's annual look at the new year examines the trends that impacted the global markets in 2015 and looks at the prospects for 2016.

Stewart turns to David Nadel, Royce Portfolio Manager and Director of International Research, about international investing; he discusses his investment philosophy and which international companies he sees as good opportunities.

The article also addresses International Premier Fund's holdings, including how Nadel and Assistant Portfolio Manager Mark Rayner were able to buck the trends of 2015’s volatile market to produce a 16% return in International Premier Fund, compared to its flat benchmark, the Russell Global ex-U.S. Small Cap.

Royce International Premier Fund ranked in the 1st percentile out of 142 foreign small-mid growth funds tracked by Morningstar for the one-year ended 12/31/15*.

Royce launched the Fund five years ago, and Nadel has managed it with the same concentrated, benchmark-agnostic strategy since its inception. Nadel looks for companies with discernible competitive advantages, high returns on invested capital, and sustainable moat-like franchises. The portfolio has a demonstrated track record of strong risk-adjusted returns as well as lower volatility than its benchmark and 90% of its peer group.

David Nadel joined Royce in 2006 and has 23 years of investment industry experience.

*Royce International Premier Fund ranked in the 67th percentile out of 119 foreign small-mid growth funds tracked by Morningstar for the five-years ended period 12/31/15. Morningstar Category % Rank is based on a fund's total-return percentile rank relative to all funds in the same category. The highest (or most favorable) percentile rank is one and the lowest (or least favorable) percentile rank is 100.

  QTR YTD 1YR 3YR 5YR SINCE
INCEPT.
DATE
International Premier 8.57 16.42 16.42 8.27 5.45 5.45 12/31/10
Russell Glo x US SC 5.11 0.50 0.50 4.32 1.87 1.87 N/A
Annual Operating Expenses: Gross 2.93% Net 1.19

Important Performance and Expense Information
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 2% 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 www.roycefunds.com. Gross operating expenses reflect the Fund's total gross annual operating expenses and include management fees, and other expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Fund’s most current prospectus. Royce & Associates has contractually agreed to waive fees and/or reimburse operating expenses to the extent necessary to maintain the Fund's net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.29% through April 30, 2016 and at or below 1.74% through April 30, 2025.

All performance and risk information presented in this material prior to the commencement date of Investment Class shares on 1/15/14 reflects Service Class results. Shares of the Fund's Service Class bear an annual distribution expense that is not borne by the Investment Class.

Important Disclosure Information

© 2016 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results

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. There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

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. Royce International Premier Fund may invest a significant portion of its assets in foreign companies, which may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, currency or other developments that are unique to a particular country or region. These risk factors may affect the prices of foreign securities issued by companies headquartered in developing countries more than those headquartered in developed countries. (Please see "Investing in Foreign 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. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund invests primarily in small-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. The Fund's investment in a limited number of stocks 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. (Please see "Primary Risks for Fund Investors" in the prospectus.) Return on Invested Capital is calculated by dividing a company's past 12 months of operating income (earnings before interest and taxes) by its average invested capital (total equity, less cash and cash equivalents, plus total debt, minority interest, and preferred stock). The portfolio calculation is a simple weighted average that excludes cash, all non-equity securities, investment companies, and securities in the Financials sector with the exceptions of the asset management & custody banks and insurance brokers sub-industries. The portfolio calculation also eliminates outliers by applying the inter-quartile method of outlier removal. 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 Global ex-U.S. Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks, excluding the United States. Index returns include net reinvested dividends and/or interest income. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

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