Royce Funds are a family of nearly approximately 20 funds devoted to small cap value investing. I am amazed how practically all their funds beat their respective indexes by wide margins. If this feat does not disprove the Efficient Market Hypothesis I do not know what does. The family of funds was started by Charles Royce over 35 years ago. The Royce Funds has recently opened several funds devoted to international small cap value investing.
One particular fund that opened in 2005 is the Royce Global Select Fund managed by David Nadel. Here is some information about Mr. Nadel from Roycefunds.com
David A. Nadel is a Portfolio Manager for Royce & Associates, LLC, investment adviser to The Royce Funds.
Mr. Nadel serves as Portfolio Manager for Royce Global Select Fund. Mr. Nadel joined the firm in 2006 and previously was a Senior Portfolio Manager at Neuberger Berman Inc. (2004 to 2006) and a Senior Analyst at Pequot Capital Management Inc. (2001 to 2003). He was also named to the 1999 and 2000 Institutional InvestorAll-American Research Teams. Mr. Nadel holds a bachelor's degree from Williams College and a master's degree from Harvard University, as well as a Master of Business Administration from Harvard Business School.
According to their website “Royce Global Select Fund (RGS) seeks long-term growth of capital and is designed for “qualified investors.” The Fund invests in both long and short positions in equity securities. The long portion of the Fund’s portfolio is invested in a limited number (generally less than 100) of U.S. and foreign micro-cap, small-cap and mid-cap companies that Royce believes possess excellent business strengths and/or growth prospects, high internal rates of return, and low leverage. The Fund may also establish up to 35% of its net assets in short equity positions, and may employ leverage. We believe that investors in the Fund should have an investment horizon of at least three years.”
Top 10 Positions As of Quarter-End 12/31/09
% of Net Assets (Subject to Change)
Portfolio Country Breakdown
as of Quarter-End,12/31/2009
% of Net Assets (Subject to Change)
The fund has a phenomenal record in its short time period. Since inception it is up 12.52% per annum versus .85% for the Russell 2000. Many times short term performance is a matter of just getting lucky by picking the right asset at the right time (ie. Gold over the past decade). However all the portfolio managers at Royce are excellent, and I expect that Mr. Nadel can be judged by his five year performance.
Below is some data about the Royce Global Select Fund returns.
Average Annual Total Returns
As of Quarter-End 12/31/09
Annual Operating Expenses
Mr. Nadel states that portfolio managers outside the United States rarely focus exclusively on small cap companies. These managers tend to pile into small caps when markets are rising and pile out when the markets are declining. This creates great opportunities for investors like Nadel.
Note: I will be doing a Q and A with David Nadel shortly. Please leave comments on this article or email me at jacobwolinsky(at)gmail.com for some questions you have for Mr. Nadel. Just one note, Royce Funds requested no questions about individual stocks, but feel free to ask about international investing in general. Please get back to me ASAP. Thanks.
One particular fund that opened in 2005 is the Royce Global Select Fund managed by David Nadel. Here is some information about Mr. Nadel from Roycefunds.com
David A. Nadel is a Portfolio Manager for Royce & Associates, LLC, investment adviser to The Royce Funds.
Mr. Nadel serves as Portfolio Manager for Royce Global Select Fund. Mr. Nadel joined the firm in 2006 and previously was a Senior Portfolio Manager at Neuberger Berman Inc. (2004 to 2006) and a Senior Analyst at Pequot Capital Management Inc. (2001 to 2003). He was also named to the 1999 and 2000 Institutional InvestorAll-American Research Teams. Mr. Nadel holds a bachelor's degree from Williams College and a master's degree from Harvard University, as well as a Master of Business Administration from Harvard Business School.
According to their website “Royce Global Select Fund (RGS) seeks long-term growth of capital and is designed for “qualified investors.” The Fund invests in both long and short positions in equity securities. The long portion of the Fund’s portfolio is invested in a limited number (generally less than 100) of U.S. and foreign micro-cap, small-cap and mid-cap companies that Royce believes possess excellent business strengths and/or growth prospects, high internal rates of return, and low leverage. The Fund may also establish up to 35% of its net assets in short equity positions, and may employ leverage. We believe that investors in the Fund should have an investment horizon of at least three years.”
Top 10 Positions As of Quarter-End 12/31/09
% of Net Assets (Subject to Change)
| Major Drilling Group International | 3.3% |
| Value Partners Group | 2.8% |
| Burckhardt Compression Holding | 2.8% |
| Hochschild Mining | 2.7% |
| Mayr-Melnhof Karton | 2.6% |
| Semperit AG Holding | 2.5% |
| Partners Group Holding | 2.5% |
| Sipef | 2.5% |
| Pfeiffer Vacuum Technology | 2.3% |
| Tesco Corporation | 2.1% |
| Top 10 as % of Total | 26.1% |
Portfolio Country Breakdown
as of Quarter-End,12/31/2009
% of Net Assets (Subject to Change)
| Canada | 13.9% |
| United States | 9.5% |
| Hong Kong | 8.3% |
| South Africa | 6.2% |
| Switzerland | 5.2% |
| Austria | 5.1% |
| Germany | 4.3% |
| Brazil | 3.9% |
| Mexico | 3.6% |
| China | 3.5% |
| United Kingdom | 3.2% |
| Peru | 2.7% |
| Belgium | 2.5% |
| France | 2.0% |
| United Arab Emirates (U.A.E.) | 1.9% |
| Finland | 1.9% |
| Australia | 1.7% |
| Italy | 1.6% |
| Denmark | 1.5% |
| Egypt | 1.5% |
| Cayman Islands | 1.5% |
| Jersey | 1.3% |
| Papua New Guinea | 1.2% |
| Sweden | 0.7% |
| South Korea | 0.4% |
The fund has a phenomenal record in its short time period. Since inception it is up 12.52% per annum versus .85% for the Russell 2000. Many times short term performance is a matter of just getting lucky by picking the right asset at the right time (ie. Gold over the past decade). However all the portfolio managers at Royce are excellent, and I expect that Mr. Nadel can be judged by his five year performance.
Below is some data about the Royce Global Select Fund returns.
Average Annual Total Returns
As of Quarter-End 12/31/09
| 4Q* | YTD* | 1YR | 3YR | |
| RSFTX | 10.57% | 56.11% | 56.11% | 6.57% |
| Russell 2000 | 3.87% | 27.17% | 27.17% | -6.07% |
| MSCI World Small Core | 2.83% | 44.12% | 44.12% | -5.49% |
| Since Incept | |
| RSFTX | 12.52% |
| Russell 2000 | 0.85% |
| MSCI World Small Core | 2.72% |
| 0.75% |
| Inception Date: 6/30/2005 |
Mr. Nadel states that portfolio managers outside the United States rarely focus exclusively on small cap companies. These managers tend to pile into small caps when markets are rising and pile out when the markets are declining. This creates great opportunities for investors like Nadel.
Note: I will be doing a Q and A with David Nadel shortly. Please leave comments on this article or email me at jacobwolinsky(at)gmail.com for some questions you have for Mr. Nadel. Just one note, Royce Funds requested no questions about individual stocks, but feel free to ask about international investing in general. Please get back to me ASAP. Thanks.
