Francis Gannon on the Next Small-Cap Cycle —Royce
article 01-31-2023

Francis Gannon on the Next Small-Cap Cycle

Francis joined host Maggie Lake on RealVision.com’s Daily Briefing to talk about what he sees as a major regime change in the market.

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On 1/27/23, Co-CIO Francis Gannon joined host Maggie Lake on RealVision.com’s Daily Briefing to talk about what he sees as a massive change in the market’s dynamics—one that may already be underway.

Francis talked about the fact that small-cap finished 2022 as the cheapest asset class among U.S. equities. He went on to detail why we think quality small caps—defined as those with high returns on invested capital and low leverage—were well positioned for long-term success. He also discussed how non-U.S. small caps also look attractively valued and why he believes select U.S. small caps in the industrial space could be poised to break out.

When discussing the recent shifts in monetary policy—most notably higher interest rates, Francis said, “We’re actually thinking we’re on the cusp of what could be a really exciting small-cap cycle in the U.S.”

You can watch Francis’s interview here.

Important Disclosure Information

Mr. Gannon’s thoughts and opinions concerning the stock market are solely their own and, of course, there can be no assurance with regard to future market movements. No assurance can be given that the past performance trends as outlined above will continue in the future.

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.

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. The Russell 2000 Value and Growth indices consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The Russell 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. The CBOE S&P 500 Volatility Index (VIX) measures market expectations of near-term volatility conveyed by S&P 500 stock index option prices. It is the square root of the risk-neutral expectation of the S&P 500 variance over the next 30 calendar days and is quoted as an annualized standard deviation.

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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