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Holly LaFon
Holly LaFon
Articles (9183)  | Author's Website |

Royce Funds Commentary: David Nadel on Finding Opportunities Amid Tariff Concerns

Portfolio Manager David Nadel discusses where he’s finding small-cap opportunities when investors are worried about tariffs

November 30, 2018 | About:

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How are tariff concerns creating opportunities?

I think the whole trade war talk does create some very nice opportunities for us. Our type of businesses, I don't think, are really in the front line of trade wars. What tends to be in the front line of trade wars are high profile consumer products, things like steel, very basic industries. We tend to be focused, by contrast, on businesses that are much more below the radar of that type of a dynamic. So, for example, B2B companies that are providing a mission-critical product or service to a corporate buyer that represents a small portion of that corporate buyer’s operating expense. I think it’ll be interesting to see how this trade war plays out. I think there is a perception that the U.S. is in the driver’s seat.

The U.S. comprises only about 9 % of global exports, and about 13 % of global imports. At this point, it kind of looks like the U.S. is in a trade war with the rest of world, and the representation the U.S. has in terms of percentage of global export and import is not that overwhelming. So it’ll be interesting to see how this plays out.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of October 15, 2018 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. The Fund invests primarily in small-cap and micro-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

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