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Dr. Paul Price
Dr. Paul Price
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Double-Digit Lifetime Returns from the Royce Closed-End Funds

March 19, 2010 | About:
The three Royce & Associates closed-end funds: The Royce Value Trust [RVT], The Royce Micro-Cap Fund [RMT] and the Royce Focus Fund [FUND] all have posted spectacular (for the time periods) NAV returns since their inception dates.

This is especially impressive since the oldest (NYSE:RVT) started in November of 1986 and the second oldest (NYSE:RMT) began operations on December 14, 1993. Royce took over management of the Focus Trust on Nov. 1, 1996.

Here are the outstanding NAV total returns compared with each other and their Russell 2000 benchmark:


Royce Value Trust

Royce Micro-Cap

Royce Focus Trust

Russell 2000































Since Incept.





Incept. Date





* Data as of Dec. 31, 2009

** Royce & Associates assumed management on 11/1/96

As of last week’s close these fine funds were still available at nice discounts to NAV. The Focus Trust sold for 10.6% below NAV while the Micro-Cap and Value Trust closed on March 13, 2010 at discounts of 15.1% and 15.2% respectively.

Royce specializes in small cap issues with a value orientation. They have far surpassed their Russell 2000 benchmark in virtually all time periods while providing solid absolute returns during one of the worst market environments in history.

While the DJIA and the S&P 500 came in about neutral for the decade ended December 31, 2009 all three of these Royce Funds posted very respectable 7.57% - 11.72% annualized results.

YTD returns for 2010 have been excellent as well.

Closed-end funds offer some huge advantages over traditional open-end mutual funds. When times are frothy they don’t get forced to accept new money that backward-looking investors tend to pour into funds right after big performance has occurred. After huge market sell-offs (like the one in late 2008 through March 9, 2009) closed-end funds were not forced to liquidate holdings to make redemptions by rear-mirror fund holders who decided to bail out when they could no longer take the pain of big paper losses. Lastly, closed-end fund bought at discounts to NAV (as these three are priced presently) give you a leverage dividend yield because you collect 100% of the payouts while needing to lay out only 85% - 90% of the true value of the shares you are buying.

These funds are perfect choices for anyone who desires time-tested, professional management for the small-cap allocation of their overall portfolio mix. How many other mutual funds performed this well during the turbulent period we’ve just concluded?

Disclosure: Author owns all shares in all three of the Royce Funds mentioned here.

Dr. Paul Price

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Dr. Paul Price

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Rating: 3.6/5 (5 votes)



Buynhold - 5 years ago
Given that Royce is a small cap value shop, I would compare their performance to the Russell 2000 Value Index. If I do that, their returns are not all that spectacular.

Index Name 1 Year 3 Years 5 Years 10 Years 15 Years

Russell 2000® Value 20.58% -8.22% -0.01% 8.27% 9.87%

Dr. Paul Price
Dr. Paul Price premium member - 5 years ago


The Royce Funds look better than the Russell 2000 Value Index also over the full 10 & 15 years.
Buynhold - 5 years ago
Barely: 10.19% and 10.56% vs. 9.87% for the value index over 15 years. I wouldn't call it spectacular :). And after tax returns (after taking distributions into account) are likely less than the index's.
Yswolinsky - 5 years ago

check out many of their other funds vs russell 2000 value most have outperformed by wide margins
Buffetteer17 premium member - 5 years ago
I've been wondering if it is time to sell my BTF (Boulder Total Return) closed-end fund shares. The current discount to NAV is about 16%. Historically the discount was ~15-17% in 2005-2006, under 10% in 2007-2008, and above 21% in 2009. The NAV discount seems to vary directly with the market mood. The fund takes an annual fee of about 2.5% year. Most of the stocks could be bought directly. Top holdings are Berkshire Hathaway, Walmart, Yum Brands, and Johnson & Johnson, which make up 70%. I already own these directly except Yum Brands.

What it comes down to is how much of a NAV discount is justified by the rather large annual fee of 2.5%. I figured when I bought in, the ~22% discount to NAV at the time would come down. It has now closed down to 16%, so I've probably already squeezed most of the juice from this lemon already.

Opinions welcome.
Dr. Paul Price
Dr. Paul Price premium member - 5 years ago

As of Friday March 19, 2010:

……………. NAV ……….. Discount ……….. 52-week market return

RVT ……….. $13.81 ………. - 14.9% …………….. 79.1%

RMT ……….. $9.61 ……….. - 15.0% …………….. 80.3%

FUND ………. $7.33 ……….. - 10.1% …………….. 65.1%

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