article 07-26-2016

Francis Gannon in FT Adviser's: "Guide to U.S. Small and Mid-Cap Funds"

Co-CIO Francis Gannon is featured in FT Adviser's "Guide to U.S. Small and Mid-Cap Funds," discussing issues ranging from the long-term advantages of U.S. small-caps to the potential benefits of under-researched sectors. 

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FT Adviser's "Guide to US small and mid-cap funds," published in June 2016 "aims to explore for a non-U.S. audience why there are so few US smaller companies funds, compared with the number of funds investing in large North American corporates, the advantages and disadvantages of US smaller company funds; where fund managers are finding pockets of opportunity at the moment and how portfolios could be constructed."

Co-CIO Francis Gannon contributed to the Guide, offering commentary on issues ranging from the low demand that has contributed to relatively few small-cap funds for clients, and the long-term advantages of small-cap investing.

About lower demand for small-cap funds, Francis said, "Despite the richness and maturity of the US stock market, most IA North American funds focus on just the largest listed companies in America, and not on smaller or mid-cap stocks. This created an opportunity for small-cap specialists to gain a foothold. As increasing numbers of US investors began to understand the attractions of small-cap stocks, the number of products took off and hopefully non-US investors will see similar things in the years ahead."

Regarding the longer-term prospects for US small-caps, Francis added, "We're also seeing signs of a reversal in small-cap's favour in the second quarter of 2016, when small-cap outpaced large-cap. More importantly to us, however, is the shift within small-cap from growth to value."

Francis also commented on the types of companies that might have been overlooked or have less analyst coverage:

"We are actively and investing in several sectors and industries right now, including financials, industrials and information technology. Even with the recent rally in US small caps, many companies in the more economically sensitive, cyclical sectors still sport valuations that we find attractive."

Francis Gannon has 23 years of investment industry experience. He joined Royce in 2006.

Read the full guide at http://www.ftadviser.com

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. 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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