Jay Kaplan on Small-Cap Opportunities in Financial Advisor
article 01-10-2017

Jay Kaplan on Small-Cap Opportunities in Financial Advisor

Portfolio Manager Jay Kaplan talks small-cap opportunities in the retail and financial space with Financial Advisor


"Small-cap stocks spent the four weeks following the election of Donald Trump shooting the lights out," says John Coumarianos in Financial Advisor's "The Small-Cap Paradox."

The article features a conversation with Portfolio Manager Jay Kaplan about where he is finding opportunities in the small-cap value space.

John recaps the asset class's recent history: "From 2000 through September 2016, the Russell 2000 Value index has scorched other indices, posting a 9.6% annualized return. The broader Russell 2000 has done well over that period too, producing a 7% annualized return. By contrast, the large-cap Russell 1000 has posted a 4.7% annualized return."

Royce Total Return Fund is described as "one of the more stable small-cap funds," and is led by Lead Portfolio Manager Chuck Royce and Portfolio Manager Jay Kaplan.

Jay is currently finding select opportunities in retail and financials, and currently likes MidWestOne Financial Group (MOFG). Describing the management team, Jay says they are, "working slowly and methodically to get costs aligned, and management has sold some branches, so loan growth has been slower than expected and the agricultural sector in Iowa has been a little weaker and that’s hurting loan growth."

Further describing why he likes the bank, he says, "The recent selloff in the bond market, creating a steeper yield curve, should also improve profitability."

Jay sees this bank as an example of "the kind of high quality bargain emblematic of the Royce Total Return approach."

Read the entire article here.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of January 3, 2017 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.

As of 12/30/16, MidWestOne Financial Group, Inc. was 0.2% of Royce Total Return Fund's assets.

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

Past performance is no guarantee of future results.

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 Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. The Fund may invest up to 25% of its net assets (measured at the time of investment) in securities of companies headquartered in foreign countries, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing Foreign Securities" in the prospectus.)



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