Royce Funds Commentary - Why Have We Been Focusing on Cyclical Growth?
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Chris Clark: You know, a lot of the corrections over the past three years, 2013 notwithstanding, have disfavored economically sensitive types of companies. That's an area where we have been active in populating our portfolios. Talk a little bit about the cyclical growth opportunity that exists in the market right now.
Chuck Royce (Trades, Portfolio): First place, we believe most companies, all companies, are ultimately cyclical. So we do not fear cyclicality. We're actually quite comfortable with getting to know a company and its own cyclical pattern. So we're comfortable with that. These companies that we're interested in probably are industrial or in the Materials sector that have excellent histories, excellent futures, and they are mispriced because of their cyclical characteristics.
Chris: What's your sense of the economy right now? Obviously, we got off to a little bit of a rocky start, a lot weather related in the beginning part of the year, but are we learning anything from the companies that we're meeting with regularly that gives us confidence in sort of our country's economic prospects, and perhaps then what we see overseas?
Chuck: I think our companies are universally sort of saying the same story, that there is a positive runway ahead of them. They're seeing progress. They've been disappointed from time to time, but they have been absolutely clear that their runway is excellent at this moment.
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