Morningstar’s Russ Kinnel makes “The Case for Royce Special Equity Fund”
article 02-28-2018

Morningstar’s Russ Kinnel makes "The Case for Royce Special Equity Fund"

Morningstar’s Russ Kinnel writes about Royce Special Equity Fund, describing how “Charlie Dreifus looks for companies with sparkling clean accounting and low debt.”

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Morningstar’s Russ Kinnel, the firm’s director of manager research, made “The Case for Royce Special Equity” in a recent piece for Morningstar’s website.

Responding to a reader who politely asked “what I was smoking” in a previous piece about the Fund—probably because the Fund underperformed the Russell 2000 in 2017—Kinnel explains that “Lead manager Charlie Dreifus looks for companies with sparkling clean accounting and low debt. Ideally, they’re also trading cheaply. This leads him to some nice, boring little companies that tend to lag in strong rallies but make it up on the downside. Few funds focus as much on accounting issues, and that makes it stand out.”

He goes on to discuss the Fund’s recent performance record, with particular attention to its bear-market results since its inception on 5/1/98, also noting that “I think one of the main reasons to go into small value is to boost diversification, and Royce Special Equity delivers that nicely.”

Charlie Dreifus, who has 50 years of investment experience, manages Royce Special Equity Fund and Royce Special Equity Multi-Cap Fund. Steven McBoyle, who has 27 years of investment experience, serves as assistant portfolio manager for Special Equity and Special Equity Multi-Cap. Steven is a portfolio manager on Royce Premier and Small/Mid-Cap Premier Funds.

Read the piece here

Important Disclosure Information

Average Annual Total Returns (%) as of 12/31/17

  QTR1 YTD 1YR 3YR 5YR 10YR 15YR SINCE
INCEPT.
DATE
Special Equity 4.59 7.87 7.87 7.72 10.33 8.82 9.69 9.46 05/01/98
Russell 2000 3.34 14.65 14.65 9.96 14.12 8.71 11.17 7.45 N/A
Annual Operating Expenses: 1.17%

Not annualized.

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees and other expenses.

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.)

Royce Special Equity Fund invests primarily in small-cap and micro-cap stocks which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) As of 12/31/17 the Fund invested a significant portion of its assets in a limited number of stocks, which may involve considerably more risk than more broadly diversified portfolio because a decline in the value of any one of these stocks would cause the Fund's overall value to decline to a greater degree. (Please see "Primary Risks for Fund Investors" in the prospectus.)

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