How Investors Can Deal With Current Volatility—Royce
article 12-10-2018

Charlie Dreifus on Asset TV’s Small-Cap Masterclass

Portfolio Manager Charlie Dreifus joined Asset TV's Small-Cap Masterclass to discuss issues in small-cap stocks and how investors can deal with current volatility.


Portfolio Manager Charlie Dreifus joined host Laura J. Keller and two other small-cap portfolio managers on Asset TV's Small-Cap Masterclass, which first aired Dec. 6, 2018, to discuss how investors can position themselves in a climate where the Russell 2000 is trading lower than what it started out at the beginning of 2018.

Watch Charlie's appearance here.

Charlie said he has seen similar situations before, citing the tech bubble and the “Nifty Fifty” market of 1973-4. “If the economy can continue to grow, albeit at a slower rate, I think the value side of this can endure and the growth and earnings will be there,” he added. “And people won't have to pay exorbitant PEs for growth.”

When discussing trade wars, Charlie said “there are no winners.” He stated that a trade war happened from 1929 until 1933, and that small-caps have historically been hurt less by other countries taking retaliatory measures because small-caps don’t export as much as large-cap companies.

The host, Laura, asked Charlie about floating versus fixed rate debt, and Charlie explained how floating rates produce more stress in a rising rate environment such as we are currently in. However, as a contrarian, he pointed out how his portfolio was hurt by low rates and has benefited from higher rates in the past.

“So low rates mean low income,” he added. “Higher rates mean higher income, so there are portfolios around, and certainly stocks around, that actually benefit by higher rates.”

Watch Charlie's appearance here.

Bio of Charlie Dreifus:

Charlie Dreifus manages the firm’s Special Equity mutual funds that attempt to combine classic value analysis, the identification of good businesses, and accounting cynicism. In 2008, he was named Morningstar's Domestic-Stock Fund Manager of the Year. Mr. Dreifus has been at Royce for 20 years and has 50 years of experience in the industry, having worked at Limited Managing Director of Lazard Freres & Co., LLC as a Portfolio Manager, General Partner, and Managing Director. He also formerly worked at Oppenheimer & Co. as a Limited Partner and as the Portfolio Manager, and at Oppenheimer Capital as an Executive Vice President. Mr. Dreifus holds a bachelor's degree from the City College of New York/Baruch School and a Masters of Business Administration from Baruch College. He is a CFA® charterholder.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of November 14, 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.

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