Why Barron’s Thinks “This Small-Cap Value Fund Is a Good Buy Now”
article 04-17-2018

Why Barron’s Thinks “This Small-Cap Value Fund Is a Good Buy Now”

Senior Editor Reshma Kapadia returns with another feature on Royce Special Equity Fund and PM Charlie Dreifus’s “risk-averse investment approach.”

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Reshma Kapadia, Senior Editor at Barron’s, penned a second feature on PM Charlie Dreifus and Royce Special Equity Fund. (Here is the link to first piece—registration required).

The article gets to the heart of what makes Charlie’s absolute value strategy so distinctive: “Dreifus, who majored in accounting at Baruch College, deep-dives into the footnotes of companies’ financial statements, applying lessons learned from mentor Abraham Briloff, who was known for exposing companies’ accounting sins… Similarly, Dreifus doesn’t take earnings growth at face value, saying it’s important to dissect the forces behind any earnings improvement, since many companies will get a boost from tax cuts.”

She goes on to detail how “Dreifus also avoids companies that focus on the increasingly common non-GAAP earnings, which don’t use generally accepted accounting principles, and often excludes items like stock option expenses.”

Read the piece here (registration required).

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 Royce Small/Mid-Cap Premier Funds.

Important Disclosure Information

Average Annual Total Returns (%) as of 3/31/18

  QTR1 1YR 3YR 5YR 10YR 15YR SINCE
INCEPT.
DATE
Special Equity -5.00 2.80 5.06 7.40 8.76 9.63 9.05 05/01/98
Russell 2000 -0.08 11.79 8.39 11.47 9.84 11.50 7.35 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.

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.The Russell 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It 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.

As of 3/31/18 the percentage of Royce Special Equity Fund’s assets were as follows: Vishay Intertechnology (VSH), 2.5%; AVX Corporation (AVX), 5.7%; Hurco Companies (HURC), 1.7%; Standard Motor Products (SMP), 4.8%; Capella Education (CPLA), 3.7%; Meredith Corporation (MDP) 4.3%. Company examples are for illustrative purposes only. This does not constitute a recommendation to buy or sell any stock. There can be no assurance that the securities mentioned in this piece will be included in any Fund’s portfolio 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.)

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 3/31/18 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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