Charlie Dreifus Talks Navigating The Bear Market In Morningstar—Royce
article 08-19-2020

Charlie Dreifus Talks Navigating The Bear Market In Morningstar

PM Charlie Dreifus was recently interviewed by Morningstar to discuss how he has positioned his portfolio to weather the bear market.


PM Charlie Dreifus was interviewed by Russ Kinnel of Morningstar in an article titled “A Conversation With Investing Legend Charlie Dreifus,” which was published August 14, 2020, to discuss how Royce Special Equity Fund performed well in the three major bear markets, inclduing the current enviroment.

Watch Charlie's appearance here.

Charlie explained that his disciplined approach focuses on winning by losing less and buying undervalued companies. He added that he seeks absolute value companies with a high return on investment capital, low leverage, and a high cash conversion so the companies produce cash when they report earnings.

“My observation, through not only the past three bear markets...but going back the entire 40 years, is that when you buy absolute value, it doesn't get harmed as much, or in some cases harmed at all, when the market loses its bearings as to what the proper multiple should be,” Charlie said.

Watch Charlie's appearance here.

Learn more about Charlie Dreifus here.

Important Disclosure Information

Average Annual Total Returns as of 6/30/20 (%) 

Special Equity 19.38 -3.09 -0.36 2.80 7.83 6.51 9.44 7.91 05/01/98
Russell 2000 Value 18.91 -17.48 -4.35 1.26 7.82 4.97 7.65 6.32 N/A
Russell 2000 25.42 -6.63 2.01 4.29 10.50 7.01 6.69 6.45 N/A

Annual Operating Expenses: 1.21

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 and other expenses.

The thoughts and opinions expressed in the video are solely those of the persons speaking as of August 5, 2020 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.

Return on Invested Capital is calculated by dividing a company’s past 12 months of operating income (earnings before interest and taxes) by its average invested capital (total equity, less cash and cash equivalents, plus total debt, minority interest, and preferred stock).

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.

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 Russell 2000 Value and Growth indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. 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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