Small Cap Pioneer Perspective

With the Russell going great guns lately and lending assurances to investors that the market is not dangerously dependent on the giant megacaps, this week's edition of WealthTrack is particularly topical in its discussion of all the 2000 smaller stocks that make up the Russell index. Enjoy the beautiful weekend.  

Small Cap Pioneer Perspective

July 6, 2023

Dear WEALTHTRACK Subscriber,

There are very few active portfolio managers with more than half a century of experience, let alone one leading the same firm for 50 years, and running the same fund which has beaten its benchmark for just about any multi-year time period you consider. 

This weekend’s guest is just such a rarity.  He is small-cap pioneer, Chuck Royce, Chairman of Royce Investment Partners which he founded fifty years ago in 1973. Chuck is also a Portfolio Manager on four Royce mutual funds and three closed-end funds. In addition, he is the Lead Portfolio Manager of the flagship Royce Pennsylvania Mutual Fund which he took over in 1972. 

Royce is credited with identifying small company stocks as a distinct area of investment before it was even recognized as an asset class with the creation of the Russell 2000 Index. Pennsylvania Mutual Fund has delivered 12% average annualized returns since inception and has beaten the small-cap universe over the years, including the last 10, 20, 30 and 40-year periods as well as the more recent 1, 3 and 5-year time frames where it has trounced its Morningstar Small Blend category as well. Morningstar gives it a bronze analyst rating for its “experienced small-cap experts,” noting that “some funds have marquee managers, others have teams. This one has both.”

Small-cap stocks in general have generated subpar returns in the last five years and have underperformed large-cap stocks by a wide margin over the last nine, but Royce says based on historical data small caps are due for a significant and lasting rebound. And he says history is the best guide to future performance. 

In this weekend’s exclusive interview, Royce discusses why his Royce Pennsylvania Mutual Fund has outperformed its benchmark for over half a century and why small-caps are laying the foundation for an extended cycle of above-average returns.    

In our EXTRA feature Royce talks about the thrill of investing and why he still loves it 60 years in! 

If you miss the show on public television, you can watch it on our website over the weekend, along with our past programs and our guests’ One Investment recommendations.  You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify.

Have a lovely summer weekend and make the week ahead a healthy, profitable and productive one!

Best regards,

Consuelo