Royce Small-Cap Total Return Fund Share Classes Upgraded to Bronze in Morningstar’s Analyst Ratings
article 09-19-2022

Royce Small-Cap Total Return Fund Share Classes Upgraded to Bronze in Morningstar’s Analyst Ratings

Morningstar upgraded the Investment, Institutional, Service, and R Class shares of Royce Small-Cap Total Return Fund from Neutral to Bronze.


On 9/13/22, Morningstar upgraded the Investment, Institutional, Service, and R Class shares of Royce Small-Cap Total Return Fund from Neutral to Bronze. Dan Culloton, the director of equity strategies for Morningstar, wrote that Lead Portfolio Manager Miles Lewis “has reinvigorated its old process, helping it earn a Morningstar Analyst Rating upgrade to Bronze from Neutral for all but one share class.” Culloton added that “Lewis and his team had put most of the fund’s holdings through his more exacting review. The portfolio owns fewer stocks—85 as of mid-2022 compared with almost 200 in 2020—and they are more profitable in terms of returns on assets and invested capital, on average, than the mean Russell 2000 Value Index stock,” while also noting that “Lewis has imposed more discipline and refocused the strategy on its best ideas while retaining the strategy’s moderate risk profile.”

He also wrote that “Yield isn't this strategy's primary objective, though. It uses dividends to find enduring, cash-rich businesses run by executives who are skilled capital allocators, and it tries to buy their shares when they look cheap or unappreciated” and that “Lewis’s temperament is suited for this strategy. Like Royce, he prefers to blend quality with valuation when picking stocks.”

About Morningstar’s Analyst Ratings

Morningstar’s Analyst Rating for funds is a forward-looking, qualitative rating that is designed to help investors find funds most likely to outperform their peers over a full market cycle. A fund that is most likely to outperform its peers receives a Morningstar Analyst Rating of Gold, followed by Silver, Bronze, Neutral, and Negative. Morningstar fund analysts assign Neutral or Negative ratings if they have little conviction in the fund’s ability to outperform.

The Morningstar Analyst Rating is based on three pillars: Process, People, and Parent. Funds receive scores of High, Above Average, Average, Below Average, or Low depending on their performance for each pillar.

“Process” refers to how managers execute their investment strategy. It also examines their investment research, decision making, and loyalty to their strategy—especially when it’s out of favor. “People” refers to the individuals who manage the fund. Managers with long tenures, qualified analysts, relevant investment experience, and diligent succession planning receive a high rating. “Parent” refers to the asset manager that offers the fund. Asset managers with a winning investment culture, detailed preparation, and fundholder-friendly processes earn a high rating.

Important Disclosure Information

Average Annual Total Returns as of 6/30/22(%)

Small-Cap Total Return -11.41 -13.63 -9.32 6.49 6.15 9.11 6.21 9.99 12/15/93
Russell 2000 Value
-15.28 -17.31 -16.28 6.18 4.89 9.05 5.58 9.28 N/A
Russell 2000
-17.20 -23.43 -25.20 4.21 5.17 9.35 6.33 8.41 N/A

Annual Operating Expenses: 1.25 (RYTRX)

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.

There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

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.



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