Buzz Zaino Discusses Stepping Down From Opportunity Fund | Royce
article , video 08-21-2018

Buzz Zaino Discusses Stepping Down From Opportunity Fund

Portfolio Manager Buzz Zaino discusses our Deep Value approach and why he’s stepping down as portfolio manager.


Why did you decide to step down from portfolio management?

Well, it wasn’t a sudden decision, it’s something that’s been evolving over the last year or two. We knew it was going to come to pass. And there was some symbolism, and that is it’s my 75th birthday, and I’m 50 years in the business, so it’s about time to make the transition.

Can you tell us about your Senior Adviser role?

Well, that’ll allow me to revert to my first love, which is basic analysis. Accumulating as much factual material as possible and make a judgement and see it work out. Therefore, I hopefully will be able to contribute something to the group.

The strategy will continue on in its path. It’s very exciting. It’s unique. And Bill and the team will continue to pursue the same ideas in the same fashion, and I’ll be sitting in the background looking on, and hopefully participating with a little contribution along the way.

What is most interesting about Royce’s Deep Value Strategy?

It’s a unique product, a unique strategy, as we’ve explained to people. And Bill and I have been working on this now for a long period of time. There is the identification, the discovery, and then there’s the acquisition, which takes time. And then there’s the patience. And finally the realization when the product has been successful and we take our profits.

It’s a strategy that always has its place, especially among smaller companies. Large companies manage their earnings to give you approximately what you expect. It’s not possible with smaller companies, so there’s interruptions, acceleration of growth, lots of things that would happen, so there are always opportunities to pursue.

There are companies that will be growing and industries that aren’t growing. And the valuations tend to be with the industry, not with the company. So they become good values. And typically there comes a point in time when the focus then goes back to the industry. It becomes a growth industry and now you get higher returns because your base is low.

Why is discipline so important in executing this strategy?

It’s a discipline that history tells us works out. And it’s that discipline that is very important to the process. That is an ethos, that is a characterization of what we do. My dictum had always been the team was always forbidden to tell me about daily performance, because that’s just not relevant to what we do. And it only obscures your intent. So we are longer-term investors, interested in very successful investments over time.

Important Disclosure Information

Average Annual Total Returns as of 6/30/18 (%) 

Opportunity 6.72 17.23 12.24 11.40 11.15 11.48 11.93 12.61 11/19/96
Russell 2000 7.75 17.57 10.96 12.46 10.60 10.50 8.03 8.90 N/A

Annual Operating Expenses: 1.18% 

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 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, other expenses, and acquired fund fees and expenses. 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.

The thoughts and opinions expressed in the video are solely those of the persons speaking as of July 9, 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 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.

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.

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.

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. The 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.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss.



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