Furey Research Partners Features Chuck Royce: Five Decades at the Intersection of Quality and Value
article 06-30-2016

Furey Research Partners Features Chuck Royce: Five Decades at the Intersection of Quality and Value

A piece on Investing "Maestro" Chuck Royce kicks off Furey Research Partners' "Small-Cap Legends" Series. 


Chuck Royce sat with Furey Research Partners to inaugurate its “Small-Cap Legend Series” to discuss his "nearly five decades as a pioneer in the small company investment community."

Furey’s Head of Sales, Jeff Burton, who penned the article, wrote, "It is not an overstatement to say that Chuck Royce invented the institutional Small Cap Equity business in 1972 when he purchased the assets of Quest Advisory and its Pennsylvania Mutual Fund."

Furey Research Partners is an independent small companies research firm that produces insightful and valuable material that we have featured on our website.

Chuck details his experience as a young portfolio manager running Royce Pennsylvania Mutual Fund in the early 70s who was tested by the 1973-4 bear market and recalls what it was like to be involved with small-cap in the days before it was recognized as a professional asset class.

He observed that Russell did not even establish its small-cap Russell 2000 Index until 1983 and then used historical data to give the index a 1978 inception date. "Asset allocators and pension consultants were not driving the move into small caps, instead that is where the value and the "volatility" were-- that is where Royce saw opportunity. Mutual funds were relatively new in the 70s, and the 'no load' component of the Royce Funds were a novelty at the time."

Chuck emphasized the importance of adding veteran small-cap portfolio managers Buzz Zaino and Charlie Dreifus in 1998 as keys to the growth of the company. He also discusses the challenges faced by the firm through the post-crisis era, and why he believes the environment is getting better for active investors.

In addition to sharing his insights on five decades of small-cap investing, Chuck outlined the current value of active management: "High quality companies protect capital in down markets. A normalization of rate structure, a shift to value leadership, and modestly higher volatility should set the stage for a resurgence of active management. High ROIC, prudently leveraged and well-managed businesses that are Royce's sweet spot should more consistently outperform."

Chuck Royce has 53 years of investment industry experience. Chuck manages Royce Pennsylvania Mutual FundRoyce 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 TrustMicro-Cap Trust, and Global Value Trust, the firm's three closed-end fund offerings.

Important Disclosure Information

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.)

The 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 Index is an index of domestic small-cap stocks that 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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