Despite a wild finish, the second quarter was still markedly more bullish and less volatile than the first—and saw a shift in small-cap style leadership that we’ll be watching closely.
Thoughts on Brexit, tariffs, and the need to look beyond a company's home country to understand the true scope of its business.
CEO and CO-CIO Chris Clark and Director of Risk Management Gunjan Banati discuss the significance of incorporating Environmental, Social, and Governance Factors into Royce's investment process.
History suggests that it's time for value stocks—as well as cyclical sectors—to take the lead in small-caps, yet investors seem to be resisting the shift. What's behind the disconnect?
Small cap stocks
Royce co-CIO Francis Gannon explains why he thinks select small-cap cyclicals look well positioned to lead in the months ahead.
Chart of the Week
Source: Bloomberg, S&P Dow Jones Indices, August 2, 2018. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
CHART OF THE WEEK
July's employment report showed growth continuing; the Fed sounded optimistic about growth in its latest statement; the UK's rate rise was about normalization, not Brexit; China took some market-based steps in the currency market.
Co-CIO Francis Gannon explains why upward revisions to CapEx spending could be very good news for small-cap cyclicals.
Bill Hench looks at the dynamics in the retail industry and outlines the factors that he thinks will help some companies to survive and thrive.
...and probably here to stay, notes Royce co-CIO Francis Gannon. His advice: tune out the noise about tariffs and rising rates, and instead focus on cyclical small caps with improving earnings and global exposure.
Increased volatility is obscuring the rising strength of small-cap earnings, which we believe should ultimately translate into leadership for certain cyclical sectors—those that combine profitability, relatively attractive valuation, and global exposure.
Small cap stocks
If the Russell 2000 index were a company, how attractive would it be to investors? Royce co-CIO Francis Gannon has his doubts.
Looking beyond the U.S.
Why should investors consider maintaining a small but consistent allocation to this often-overlooked asset class? The answer is simple: superior risk-adjusted returns with very low correlation to traditional equities.
Smaller companies in cyclical sectors that do business abroad -- or with other U.S. firms that have global exposure -- could be well positioned to benefit from improving global growth.
Co-CIO Francis Gannon discusses the ongoing consolidation in small-caps, while also touching on earnings, valuations, and the prospects of a pick-up in volatility.
International small-caps have attractive attributes and active managers are well positioned to uncover the best that this underutilized asset class has to offer.
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