Francis Gannon on Bloomberg
article 01-09-2019

Francis Gannon on Bloomberg

Co-CIO Francis Gannon was a guest on "Bloomberg Daybreak: Americas" to discuss Royce’s outlook on small-cap stocks in the current volatile market.

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Co-CIO Francis Gannon joined hosts Alix Steel and David Westin on "Bloomberg Daybreak: Americas" on January 8, 2019 to discuss where Royce Portfolio Managers are finding opportunities amid the recent decline.

Watch Francis’ appearance here.

Francis said that despite the historical December decline, he remains confident that select small-caps can rebound this year. 2018’s decline marked the 12th negative year in the history of the Russell 2000 index, and history shows that small-caps have boasted a significant return the following year in 10 out of 12 of those declines. The average return among them was more than 21%, he cited.

“I think it goes to active management, and finding those companies that are not leveraged from a financial standpoint but are more leveraged from an operations standpoint,” Francis added. “I think you’ll find great opportunity in the market going forward.”

Francis added that within small-caps, Royce’s portfolio managers have been finding opportunities in cyclical companies during the decline. He said that small-cap companies have more pricing power than may would think, and further observed that a lot of bad news has already been priced into the market. “Many of the things that the market was concerned about last year—tariffs, wage inflation, wage pressure, etc.—most companies have been able to pass on,” Francis said.

Watch Francis’ appearance here.

Bio of Francis Gannon:

Co-CIO Francis Gannon has been with Royce for 12 years, having joined in 2006. He has 26 years of experience, and in 2001 a portfolio under his management, SunAmerica Growth and Income Fund, was listed in the fourth edition of Gene Walden's book The 100 Best Mutual Funds to Own in America. He was also a regular panelist with Louis Rukeyser's Wall Street for several years. Francis holds a bachelor’s degree and a master’s degree from Boston College.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of January 8, 2019 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.

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 Index 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.

Cyclical and Defensive are defined as follows: Cyclical: Consumer Discretionary, Energy, Financials, Industrials, Information Technology, Materials. Defensive: Consumer Staples, Health Care, Real Estate, Telecommunication Services, Utilities.

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 micro-cap, small-cap, and/or mid-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.) Investments in foreign companies may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see "Investing in International Securities" in the prospectus.)

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