Great Expectations for Small-Cap Active Management
NEW YORK, Feb. 27, 2015 /PRNewswire/ -- What to make of 2014 -- a year in which the Russell 2000 posted a relatively undistinguished single-digit gain of 4.9%, ceded leadership to its larger siblings, and still boasted some of the market's hottest investment areas -- e.g., biotech and social media -- in 2014?
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In the view of Royce & Associates, reversion to the mean is as close to an iron law as the capital markets allow. Previously underperforming cyclical companies appear due for a round of revenue acceleration, particularly those in the Consumer Discretionary, Industrials, and Information Technology sectors. In these and other cyclical areas, we see profitable, conservatively capitalized businesses that have either been ignored or whose returns have lagged. Why do we expect this to change?
Important Disclosure Information
The thoughts above are solely those of Royce & Associates, LLC, investment adviser to The Royce Funds. Past performance is no guarantee of future results. There can be no assurance as to future market performance.
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. Investments in securities of smaller-cap companies may involve considerably more risk than investments in larger-cap companies. (See "Primary Risks for Fund Investors" in the prospectus.) The Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.
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SOURCE The Royce Funds
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