article 06-28-2016

Chuck Royce on WealthTrack: Small Company Value

In an exclusive interview with Consuelo Mack WealthTrack, Chuck Royce talks about the current challenges facing active management, why he thinks value investing will be rewarded, and where he is finding opportunities in the small-cap universe. 

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Courtesy of Consuelo Mack WealthTrack. All Rights Reserved.

On June 24, 2016, Chuck Royce was a guest on Consuelo Mack WealthTrack.

In the interview, Chuck discussed the benefits of owning small-cap stocks and the causes of value investing's underperformance from 2011-2015, while explaining how reversion to the mean is helping to bring value back so far in 2016.

In addition, Chuck told Consuelo where he is finding opportunities in the small-cap universe today, including companies in the Finance, Technology, and Energy sectors.

Chuck noted the strong historical correlation between value investing and active management, "I think a really good active manager is always sort of in the risk management business. I think active managers in general are risk adverse, or are managing risk. And any step you took to manage risk in that straight up market reduced returns and it’s almost that simple."

Chuck continued, saying, "Risk managers will be rewarded, not penalized, and that’s already taking place."

Describing the kind of companies he looks for, Chuck said, "We like low valuation, high quality. So we are always investing in the intersection of quality and value."

Chuck Royce has 53 years of investment industry experience. Chuck manages Royce Pennsylvania Mutual Fund, Royce Premier Fund (with Lauren Romeo and Steven McBoyle), Royce Total Return Fund and Dividend Value Fund (with Jay Kaplan), and Royce Global Financial Services Fund (with Chris Flynn). He also manages Royce Value Trust, Micro-Cap Trust, and Global Value Trust, the firm's three closed-end fund offerings.

Important Disclosure Information

Percentage of Fund Holdings as of 3/31/2016 (%)

  Ares Management, L.P. Lazard Ltd
Cl. A
t
Cognex
Corporation
Diebold, Incorporated
Pennslyvania Mutual
0.00
0.27
1.45
1.58
Value Trust
0.85
0.08
1.14
1.14
Premier
1.75
0.88
2.41
0.58
Micro-Cap Trust
0.00
0.00
0.00
0.00
Total Return
0.00
0.00
1.21
0.00
Global Financial Services
1.98
0.00
0.00
0.00
Dividend Value
0.00
2.39
0.00
3.02
Global Value Trust
0.00
0.00
0.00
0.89

There can be no assurance that any of the securities mentioned in the video will be included in these portfolios in the future. References to specific securities in this video are not intended as recommendations and should not be relied upon as the basis for anyone to buy, sell, or hold any security. 

Chuck Royce is Chief Executive Officer and a Portfolio Manager of Royce & Associates, LP, investment adviser to The Royce Funds. Mr. Royce's thoughts in this interview concerning the stock market reflect his opinions and, of course, there can be no assurance with regard to future market movements. No assurance can be given that the past performance trends as outlined above will continue 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. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)

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