Small Caps and Inflation: Francis Gannon on CNBC’s Power Lunch—Royce
article 01-28-2022

Small Caps and Inflation: Francis Gannon on CNBC’s Power Lunch

Co-CIO Francis Gannon was a guest on CNBC’s Power Lunch discussing why small-cap earnings will matter, how the asset class may fare against inflation, and more.


Co-CIO Francis Gannon was recently featured on CNBC’s Power Lunch discussing if small-caps will best weather inflation—as they have historically.

Watch the video here.

Francis explained that small-caps, as measured by the CRSP 6-10 Index, are the only major asset class that’s beaten inflation in every decade since the 1930s. He also mentioned that the Russell 2000 posted its third consecutive year of double-digit positive returns in 2021, but has never had a fourth consecutive year of positive double-digit returns, so results are likely to be more muted this year.

He added that underlying corporate fundamentals remain strong and that the valuation picture looks compelling, noting that he believes the next three to five years look positive for active management.

Watch the video here.

Learn more about Francis Gannon.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of January 24, 2022 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 12/31/2021 (%)

  BOK Financial Element Solutions Barrett Business

Capital Micro-Cap

0.0 0.0 0.0

Capital Small-Cap

0.0 0.0 0.6

Dividend Value

2.1 0.0 0.0

Global Financial Services

2.9 0.0 0.0

International Premier

0.0 0.0 0.0


0.0 0.0 0.0


0.0 0.0 0.0

Pennsylvania Mutual

0.2 1.2 0.0


0.0 0.0 0.0

Small-Cap Value

0.0 0.0 0.6

Smaller-Companies Growth

0.0 0.0 0.0

Special Equity

0.0 0.0 0.0

Total Return

1.3 2.1 0.8

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.

The (Center for Research in Security Prices) CRSP (Center for Research in Security Pricing) equally divides the companies listed on the NYSE into 10 deciles based on market capitalization. Deciles 1-5 represent the largest domestic equity companies and Deciles 6-10 represent the smallest. CRSP then sorts all listed domestic equity companies based on these market cap ranges. By way of comparison, the CRSP 1-5 would have similar capitalization parameters to the S&P 500 and the CRSP 6-10 would have similar capitalization parameters to those of the Russell 2000.

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 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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