Chuck Royce Talks Underappreciated Small Caps on WealthTrack—Royce
article 10-13-2021

Chuck Royce Talks Underappreciated Small Caps on WealthTrack

PM Chuck Royce was a guest on Consuelo Mack WealthTrack discussing how small cap performance has been less recognized over the last decade compared to their large cap peers.


On 10/8/21, our founder and Portfolio Manager Chuck Royce was the guest on Consuelo Mack WealthTrack, where he talked about why small-cap stocks merit attention as a rich and diverse asset class and his confidence that higher quality small caps look poised to perform well now that the current performance cycle is maturing.

Watch the video here.

He mentioned regional banks as an interesting investment opportunity in the small-cap value space, many with the added benefit, in his view, of steady dividends.

He also detailed how he became a small-cap investor in the early 1970s, when the lines between asset classes were not as sharply drawn as they are today. He found himself drawn to small stocks because, "That's where the fun was." He recalled that meeting with capable and fascinating management teams kept him interested in smaller companies.

He and Consuelo reviewed the evolution of the asset class over nearly five decades. They also discussed his core and high-quality approaches, and how he and other investment professionals at our firm developed a growing interest in non-U.S. quality stocks to complement our domestic strategies over the last two decades.

Watch the video here.

Learn more about Chuck Royce.

Important Disclosure Information

Average Annual Total Returns as of 9/30/21 (%)

  Average Annual Total Returns (%) Annual
Expenses (%)
  QTD YTD 1YR 3YR 5YR 10YR 15YR 20YR 45YR/Since
Date Gross Net
Pennsylvania Mutual -2.18 14.06 45.02 10.37 13.80 12.95 8/79 10.64 13.25 N/A 0.95 N/A
Premier -3.20 6.84 33.89 9.77 13.91 12.00 9.63 11.55 11.70 12/31/91 1.21 N/A
International Premier 0.96 7.54 21.93 13.70 13.98 12.37 N/A N/A 9.54 12/31/10 1.26 1.19
Russell 2000 -4.36 12.41 47.68 10.54 13.45 14.63 9.16 10.29 N/A N/A N/A N/A
MSCI ACWI ex USA Small Cap 0.00 12.23 33.06 10.33 10.28 9.44 N/A N/A 6.66 N/A N/A  N/A

1For Royce Pennsylvania Mutual Fund, the average annual total return shown is for the 45-year period ended 9/30/21.

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 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. Investment Class shares redeemed within 30 days of purchase may be subject to a 1% redemption fee payable to the Fund (2% for Royce International Premier Fund). Redemption fees are not reflected in the performance shown above; if they were, performance would be lower. Current performance may be higher or lower than performance quoted. Current month-end performance may be obtained at All performance and expense information reflects results of each Funds’ Investment share Class. Price and total return information is based on net asset values calculated for shareholder transactions. Gross annual operating expenses reflect the Fund’s gross total annual operating expenses and include management fees, any 12b-1 distribution and service fees, other expenses, and any applicable acquired fund fees and expenses. Net annual operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of each Fund’s most current prospectus. Royce & Associates has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Royce International Premier Fund Investment Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.19% through April 30, 2022. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

All performance information for Royce International Premier Fund presented in this material prior to the commencement date of Investment Class shares on 1/22/14 reflects Service Class results. Service Class shares bear an annual distribution expense that is not borne by the Funds’ Investment Class. If such distribution expenses had been reflected for Funds showing Investment Class performance, returns would have been lower. 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.) Certain Funds invest a significant portion of their respective assets in foreign companies that 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 Foreign Securities” in the prospectus.) Therefore, the prices of securities of foreign companies in particular countries or regions may, at times, move in a different direction than those of securities of U.S. companies. (Please see “Primary Risk of Fund Investors” in the prospectus.) Certain Funds generally invest a significant portion of their assets in a limited number of stocks, which may involve considerably more risk than a more broadly diversified portfolio because a decline in the value of any of these stocks would cause their overall value to decline to a greater degree. A broadly diversified portfolio, however, does not ensure a profit or guarantee against loss.

The thoughts and opinions expressed in the video are solely those of the persons speaking as of October 8, 2021 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 presentation 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.

Percentage of Fund Holdings As of 9/30/2021 (%)

  Royce Pennsylvania
Mutual Fund
Premier Fund
Premier Fund

Independence Bank Group, Inc.




Home BancShares Inc.




Air Lease Corporation, CI. A




Quaker Chemical Corporation




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.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

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. All indexes referenced are unmanaged and capitalization-weighted. The Russell 2000 Index is an index of domestic small-cap stocks that measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 1000 Index is an unmanaged, capitalization-weighted index of domestic large-cap stocks. It measures the performance of the 1,000 largest 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.

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. The MSCI ACWI ex USA Small Cap Index is an unmanaged, capitalization-weighted index of global small-cap stocks, excluding the United States. Index returns include net reinvested dividends and/or interest income. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

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.)



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