2020 will likely go down as one of the most challenging years many of us have faced and I want to begin by sharing my sympathy and concern for all those most affected by this horrible pandemic. I am cautiously optimistic that 2021 will be the year in which we pivot toward defeating COVID but recognize that significant challenges remain in healing and recovering from the personal and professional costs it has wrought.

As for Royce, 2020 was a transformational year, and I am excited to share several developments that I believe have strengthened our business and positioned our investment strategies for continued success. Importantly, our mission remains unchanged—to deliver the best investment outcomes, solutions, and client service to our investors through our dedicated focus on the global small cap asset class.

It was almost exactly one year ago that Franklin Templeton announced the acquisition of Legg Mason and its Specialist Investment Managers (SIMs), news that kicked off a process that concluded with the closing of the merger on July 31. The transaction has gone as well as we at Royce could have hoped. Every day, Franklin is proving to be a significant resource and supportive partner. Franklin’s global distribution team is providing increased reach for our products as more and more clients across the globe are looking to, or considering, Royce to meet their small-cap allocation needs.

We are also benefiting from Franklin’s deep institutional resources across several other important areas—including ESG, diversity & inclusion, and cybersecurity—all significant priorities for our firm. These positive developments are all taking place while we maintain our all-important operational autonomy. Franklin recognizes the critical importance of our unique brand in the marketplace and the value our clients place on our intellectual and investment independence.

Royce has been very purposeful in addressing the dramatic changes that have impacted the asset management business over the last several years. We refined our investment lineup—which made our strategies easier to distinguish for different clients across different distribution channels—while adopting a vehicle agnostic approach to the delivery of our investment expertise. We are proud to be delivering our more than four decades of investment expertise across several vehicles within our established strategies. Offering a full breadth of vehicles better aligns Royce with the evolving needs of our clients while positioning our firm to meet the ever-changing landscape of the investment management industry.

Our investment performance, of course, we owe to the skill and diligence of our dedicated and talented portfolio managers and analysts. Despite the challenges of working remotely, we were quite pleased to see considerable breadth of performance strength in 2020—and so far in 2021. Our investment team has delivered solid results across our lineup and continues to execute our hallmark approach to highly active small cap investing.

I am excited to report that we continued to expand our investment staff in 2020 by hiring Portfolio Manager and Principal, Miles Lewis, CFA®, Senior Analyst and Director of International Research Mark Fischer, and Senior Analyst and Director of Strategic Research Jag Sriram, CFA®. All are making meaningful contributions to Royce, bringing fresh perspective and expertise to our investing activities. Equally important, we plan on hiring additional investment professionals in 2021 as we continually seek to exploit the breadth of opportunities presented in our large and highly differentiated asset class.

Finally, we are pleased to report that our Business Continuity Plan triggered by the COVID pandemic has been well executed and successful as we approach the one-year anniversary of our required remote working environment. While we greatly miss the day-to-day in person engagement of what has always been our deeply collegial culture, our health and safety protocols have been highly effective in safeguarding our employees. We have learned new and innovative means of communication and collaboration and our productivity remains at the highest level.

In conclusion, I want to reiterate how highly we value the trust and partnership we share with our clients and how committed we remain to the highest standards of investment excellence and transparency during these extraordinary times. Please do not hesitate to reach out to us with any questions and we very much look forward to continuing to serve your investment needs in the global small cap asset class.

Most importantly, we wish you and your families all the best in the days and weeks ahead.

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