article 11-11-2016

Steve Lipper on the World of Small-Caps on MoneyLife with Chuck Jaffe

Senior Investment Strategist Steve Lipper discussed small-caps' prospects on MoneyLife with Chuck Jaffe and how they could fit into a diverse portfolio.

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Senior Investment Strategist Steve Lipper joined the financial radio talk show MoneyLife with Chuck Jaffe on November 8, 2016, discussed the small-cap market and thoughts on asset allocation for the asset class.

Steve explained what he thinks might happen next in the market, and in small-caps: "We think in our world of small-cap–we think small-caps continue to rally. That’s the good news for people who are investing for long-term for their retirement. People will return their attention to how companies are doing, how they’re growing, how they’re gaining market share, what sort of profits and profit margins they’re having, what sort of smart things they’re doing with their balance sheet or otherwise, and we’re optimistic around here, particularly in small-caps, our area.

On the differences between small-cap and large-cap, and how that can often be confused, Steve said: "In small-cap we actually had a bear market. We had about a 25% decline from last summer to February which is about a normal decline for us and we think in mid-February we just began a brand new up cycle that could last for years. It’s only up about 30% since February and if you look at over the history of the decades, what do small-caps cycles, generally, how much do they go, usually should go a lot longer, sometimes, actually frequently approaching a double from the bottom to the top of the cycle. So people, I think, sort of are maybe looking at the wrong gauge when they’re thinking about small-caps and they’re not understanding that they’re going to have quite independent movements.

Steve suggested looking at variance within the small-cap asset class: "Small-cap value is doing nearly twice as good as small-cap growth. Our view is that we’re in the first year of a multi-year phase on that, so we would encourage people to be aware of that distinction, value versus growth and broadly those are different types of companies at different parts of their life cycle that those two strategies will have in them."

Listen to the entire MoneyLife with Chuck Jaffe segment here.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of November 8, 2016 and may differ from those of other Royce investment professionals, or the firm as a whole.

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.)

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