Charlie Dreifus Marks 20 Years at Royce
article 05-01-2018

Charlie Dreifus Marks 20 Years at Royce

On May 1st, Charlie Dreifus celebrated his 20th anniversary at Royce and as portfolio manager of Royce Special Equity Fund.

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We are very pleased to announce that Charlie Dreifus celebrated his 20th anniversary at Royce & Associates, LP and as portfolio manager of Royce Special Equity Fund on May 1, 2018. A $10,000 investment made at the Fund’s 5/1/98 inception would have been worth $56,163 on 3/31/18 versus $41,082 for the same $10,000 investment in the Russell 2000 Index over the identical time period.

Charlie manages the Fund using a distinctive absolute value approach that he began to hone 50 years ago when he first embarked on his career as a professional investor, which has also included managing small-cap portfolios at Oppenheimer & Co. and Lazard Freres & Co.

His approach is perhaps best distinguished for deriving methods from three respected financial thought leaders—Ben Graham, Warren Buffett, and accounting legend Abe Briloff—and melding them into his own unique investment approach.

From Ben Graham, Charlie learned to invest with a margin of safety by focusing on valuation and understanding balance sheets while Buffett’s approach taught him the importance of overall company quality and managements that are good stewards of capital.

Abe Briloff, who was both Charlie’s teacher and dear friend, showed him how scrutinous attention to accounting issues can reveal important insights into corporate culture, ethics, and governance.

Chuck Royce, Chairman and Portfolio Manager of Royce, said, “I knew how talented an investor Charlie was almost immediately after meeting him more than 40 years ago. We were thrilled to have him join us 20 years ago and feel even better for those investors who have been with Charlie over that period.”

Charlie has received distinguished awards over his career including Morningstar Domestic Manager of the Year for 2008. His Royce Special Equity Fund has also received recent accolades from both Morningstar, “The Case for Royce Special Equity Fund,” and Barrons, “Time to Buy this Small- Cap Value Fund.”

Looking at the current market, Charlie remains firm in his belief that many of his holdings could be potential takeover targets for both strategic buyers and private equity firms. He recently said, “The latter are under pressure to deploy their record sums of cash while many strategic buyers face rising raw material costs, which the purchase of a competitor offers many ways to reduce. For a potential suitor, inexpensively valued companies with little or no debt should be attractive purchase candidates.”

Important Disclosure Information

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

1YR1 5YR 10YR SINCE INCEPT. DATE
Special Equity 2.80 7.40 8.76 9.05 05/01/98
Russell 2000 11.79 11.47 9.84 7.35 N/A

Annual Operating Expenses: 1.17% 

1 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. 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.)

The thoughts and opinions expressed in this material are solely those of the persons speaking as of May 1, 2018 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.

The performance data and trends outlined in this material are presented for illustrative purposes only. Past performance is no guarantee of future results. Historical market trends are not necessarily indicative of future market movements.

About Royce & Associates, LP: Royce & Associates, LP, is a small-cap equity specialist offering distinct investment strategies with unique risk/return profiles designed to meet a variety of investors’ needs. For more than 40 years, our strategies have focused on active, risk-conscious investing driven by deep, fundamental company research. Chuck Royce, the firm’s founder and a pioneer of small-cap investing, enjoys one of the longest tenures in the industry. Royce & Associates, LP is a subsidiary of Legg Mason Inc. (NYSE: LM). Royce Fund Services, Inc., the Fund’s distributor, is a member of FINRA and the SIPC.

For Morningstar’s 2008 “Domestic-Stock Fund Manager of the Year” award, Morningstar awarded managers based on their fund’s 2008 performance, long-term performance through year-end 2008, fund assets, and investment strategy consistency. Morningstar also looked for managers who “are great stewards of shareholders’ interests and who stay with their proven strategies rather than follow investing trends.

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.

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