Fund Performance

For the year-to-date period ended 6/30/25, Royce Global Trust advanced 13.4% on a (NAV) basis and 12.2% based on its market price versus a gain of 7.9% for its benchmark, the MSCI ACWI Small Cap Index. The Fund also beat its benchmark on both an NAV and market price basis for the 3- and 10-year periods ended 6/30/25. In addition, the Fund also outpaced the MSCI ACWI Small Cap on an NAV basis for the 1-year period ended 6/30/25 while trailing the benchmark on an NAV and market price basis for the 5-year period.

What Worked… and What Didn’t

Nine of the Fund’s 10 equity sectors contributed to year-to-date performance, led by Financials (by an impressive margin), Industrials, and Materials. Energy was the only detractor while the smallest positive contributions came from Real Estate and Health Care. At the industry level, two areas in Financials, capital markets and insurance, made the biggest positive contributions, followed by metals & mining (Materials). The leading detractors were chemicals (Materials), oil, gas & consumable fuels (Energy), and media (Communication Services).

The Fund’s top contributor at the position level in the first half of 2025 was Tel Aviv Stock Exchange, Israel’s only public equity and debt exchange operator, which benefits from a high-margin, infrastructure-light platform model with revenue derived from trading commissions, listings, clearing fees, and technology services. The stock outperformed as equity trading volumes surged amid increased foreign investor participation and improved local sentiment following easing geopolitical tensions. The company also benefited from higher listing activity and new product launches, including ESG-linked instruments and expanded derivatives offerings. In addition, ongoing structural reforms in Israel’s capital markets, including pension fund liberalization and improved regulatory frameworks, have further enhanced TASE’s long-term growth trajectory. With a near-monopoly position, a scalable operating model, and growing SaaS (software as a service)-style recurring revenues from market data and connectivity services, we think TASE remains well positioned. Management’s disciplined capital return strategy, including raising dividends and opportunistic buybacks, has also resonated with investors seeking quality compounders in emerging markets.

Headquartered in Canada, Sprott is a global alternative asset manager specializing in precious metals and real assets. Sprott operates a diversified platform of exchange-listed products, private equity funds, and lending strategies focused on gold, uranium, and energy transition metals. Shares advanced in the first half of 2025 as gold prices broke out to record highs amid elevated geopolitical risk, central bank buying, and a weaker U.S. dollar. Sprott’s suite of physical bullion trusts and energy transition ETFs saw substantial inflows, driving strong growth in assets under management and recurring fee revenue. The firm also benefited from robust performance in its private strategies, particularly in uranium and critical minerals lending. Management continues to scale its global distribution, with new mandates secured across Europe and Asia. With strong operating leverage, a clean balance sheet, and secular tailwinds behind the resource transition, Sprott remains well positioned to compound earnings across commodity cycles.

Based in Norway, Protector Forsikring, which was another top contributor, is a property and casualty insurer with operations across the Nordics and the U.K. The company continued to demonstrate underwriting discipline, with improved claims outcomes across several business lines and strong pricing momentum in its core markets. Its shares advanced as investors responded favorably to management’s ability to balance growth with profitability, while maintaining a low-cost operating model that remains a key differentiator in the Nordic insurance landscape. Protector also benefited from continued premium expansion, driven by strong renewal rates and success in winning new mandates through broker channels. Its investment portfolio delivered solid returns amid a constructive market backdrop, reinforcing the firm’s already strong capital position. Additionally, the company’s recent expansion into continental Europe was met with positive early indicators, further supporting its long-term strategic goals.

Alamos Gold, a Canada-based gold producer with operations primarily in North America was also a top contributor whose stock climbed as the company delivered strong operating results and benefited from rising gold prices. Alamos continued to execute on its multi-year growth strategy, with rising production levels and consistent cost control driving improved operating leverage. Investor sentiment was further supported by progress on the company’s key development projects, which remain on time and within budget, reinforcing confidence in future production growth. Alamos also maintained a strong balance sheet and capital return strategy, underpinned by robust free cash flow generation.

Another Israel-based position, Phoenix Holdings is that nation’s leading financial services group with operations across insurance, asset management, and retirement savings. The company benefited from broad-based earnings growth in 2025’s first half thanks to strong investment performance, disciplined underwriting, and secular growth in long-term savings and pension flows. Phoenix has also continued to diversify its fee-based businesses, scaling its asset management arm through both organic growth and targeted M&A while recently beginning to simplify its corporate structure and enhance transparency. Additionally, rising interest rates have been a tailwind for spread-based insurance earnings and reserve release dynamics. Phoenix also boasts a low-debt balance sheet, attractive dividend yield, and improving return-on-equity profile. We think the company’s growing footprint in alternatives and digital distribution channels have it poised to capture market share in a consolidating domestic landscape.

The portfolio’s biggest detractor in the year-to-date period was U.S. headquartered FTAI Aviation, which provides aftermarket engine materials, inventory, and services for commercial and military aircraft. FTAI operates a high-touch, asset-efficient model centered on engine teardown, parts distribution, and lease pool management for high-cycle-use fleets such as the CFM56 and V2500. Despite the long-term structural demand for used engine components, its stock declined in the first half of 2025 as FTAI faced a combination of margin pressure and uneven material flow-through. Softer-than-expected teardown volumes and delays in parts monetization weighed on inventory turns and near-term earnings visibility. Easing OEM (original equipment manufacturer) supply constraints and more aggressive pricing from competitors created headwinds in some key international markets. The stock also reacted to broader concerns around normalization in the aviation MRO—maintenance, repair, and overhaul—cycle, especially as some carriers accelerated fleet transitions away from older engine types. Uncertain about its long-term prospects, we sold the last of our stake in the Fund in May.

Also based in the U.S., Innospec is a global specialty chemicals company serving a broad range of end markets, including fuel additives, oilfield services, and personal care. Innospec operates with an attractive asset-light model and generates strong free cash flow supported by recurring, formulary-driven sales and long-term customer relationships. Its stock underperformed in the first half of 2025 primarily due to softer-than-expected results in its Performance Chemicals and Oilfield Services segments, which faced cyclical volume headwinds amid lingering global destocking and weaker activity in international energy markets. Fuel Specialties, Innospec’s largest and most profitable business, remained relatively stable but was not enough to offset weakness elsewhere. Concerns around the slowing pace of global economic activity and reduced diesel demand in key geographies have added incremental pressure to investor sentiment. Despite these near-term challenges, we believe Innospec remains a high-quality operator with strong long-term fundamentals, particularly as it continues to pivot toward higher-growth, higher-margin specialty formulations in personal care and performance chemicals. The company maintains a net cash balance sheet, continues to generate robust free cash flow, and has a long history of disciplined capital allocation, including share repurchases and tuck-in acquisitions. We remain confident in management’s ability to navigate cyclical pressures and believe Innospec is well positioned to benefit from an eventual recovery in end-market demand and continued portfolio upgrade efforts. We added to our stake in 1Q25.

Transcat provides test, measurement, and calibration services with mission-critical applications in life sciences, aerospace, and industrial end markets. Its shares declined in the first half of 2025 as investors reacted to softer-than-expected margins and longer-than-anticipated integration of recent acquisitions. Slower ramp in acquired lab productivity and near-term dilution from capacity investments weighed on profitability, despite resilient top-line trends. Increased competition in certain industrial markets also pressured pricing, while the pace of calibration demand in discretionary sectors moderated. The stock also lagged amid a broader rotation out of smaller-cap industrial services names with elevated near-term cost pressures.

Viper Energy is a royalty and mineral interest company with exposure to oil and natural gas production across the Permian Basin (located in Texas and New Mexico). Viper benefits from a low-CapEx, high-margin model as it receives a percentage of revenue from third-party operators’ production on its mineral acreage. Its shares were sluggish amid weakening WTI (West Texas Intermediate) crude prices and moderating U.S. shale production growth. Several key Permian operators also revised CapEx plans lower, reducing near-term rig activity on Viper’s royalty lands while a flatter futures curve and persistent cost inflation at the operator level pressured expectations for future volume growth. Viper, however, continues to generate strong free cash flow, maintains low leverage, and is positioned to benefit from any rebound in horizontal drilling across its core Midland and Delaware Basin positions.

Based in Israel (and the only non-U.S. holding among the Fund’s five biggest detractors in the first half of 2025), Cellebrite DI is a leading provider of digital intelligence solutions used by law enforcement, defense, and enterprise customers to extract and analyze digital data. While the company continues to benefit from long-term tailwinds around digital evidence collection and investigation complexity, the shares declined in the face of slower bookings growth due to timing delays in large public sector contracts and procurement cycles, especially in North America. Revenue growth remained positive but came in below expectations, and elevated sales and R&D investment compressed margins during the first half of the year. A stronger U.S. dollar and increased geopolitical scrutiny around digital surveillance tools also helped to keep its stock price lower. Despite these headwinds, Cellebrite’s high gross margins, sticky software model, and expanding footprint across global police agencies remain compelling in our view. Management continues to invest in next-gen AI-driven analytics and workflow automation tools, which could drive longer-term platform expansion and annual recurring revenue growth.

The Fund’s advantage versus the MSCI ACWI Small Cap was primarily due to stock selection in 2025’s first half, though sector allocation was also additive. At the sector level, stock selection and, to a lesser degree, a much larger weighting in Financials helped relative results most, followed by stock selection and a much lower exposure to Consumer Discretionary and lower exposure in Health Care (with an assist from stock selection). Conversely, stock selection in Industrials and Materials, as well as lack of exposure to Utilities, hurt relative performance most.

Current Positioning and Outlook

At the end of June, the Fund’s biggest sector weights were Financials, Industrials, and Information Technology, with the first two overweighted versus the MSCI ACWI Small Cap. Our long-term outlook remains constructive, though admittedly the near-term forecast for equities remains murky. There are worrisome signs in the U.S., with tariffs, inflation, and falling consumer confidence all legitimate concerns. If we do endure a recession, or even a period of stagflation, we will continue to hunt for attractive stock prices in companies that also have some combination of low debt, robust cash flows, established earnings histories, strong long-term growth prospects, and proven management. We think it’s also important to remember that difficult economic and/or market phases are finite. Those who stand to profit most when a recovery arrives are almost always those investors who stayed the course during stormy weather. In the event that these concerns prove to be overheated, and the global economy continues to grow, we see high potential for a sustained period of small-cap leadership. For this and other reasons, we would welcome any degree of increased scrutiny of company fundamentals.

Average Annual Total Returns Through 06/30/25 (%)

Annual Operating Expenses: N/A

¹ Not annualized.

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