A Disciplined Strategy Will Prove Its Merits by Charlie Dreifus, CFA – The Royce Funds
Portfolio Manager Charlie Dreifus delves into the details of 2015 performance for Royce Special Equity Fund while discussing the portfolio’s disciplined contrarian strategy, one that is bottom-up and fundamental.
Watch the video here.
A Disciplined Strategy Will Prove Its Merits
I want to thank my investors for being patient, and for being understanding.
This is a strange year for me. This is a year that I’ve never experienced before in my career, in the sense that in a down year, where my fund will be down more than the Index.
In most cases, the fund was actually up in down years, and in the years when I was down, I was down less than the market, on an annual basis.
On a quarterly basis, it happens all the time. That’s noise. But on an annual basis, you have to take notice of it.
Special Equity Portfolios 2015 Review
In 2015, the portfolios, were affected by two primary factors. The names I didn’t own – the market tended towards growth names, and even within that, a very selected few.
Many people have pointed out that the market has been incredibly narrow. There have been four to ten names in 2015 that gave the entire performance. I didn’t own any of those, nor would my approach be consistent with owning those. It’s not what I do.
I was also affected by what I did own. I had many retailers, most of whom were still transitioning into greater traction in their e-commerce efforts.
But overall, I’m not doing anything that differently. I’m doing it as I’ve always done.
I know that what I’m doing makes total economic sense.
If you’re in the Mergers and Acquisition business, if you’re a CFO, if you’re an M&A attorney, what I do makes such basic economic sense.
What we’re doing is we’re applying the laws of economics, accounting, and capitalism to selection.
You can be out of sync if you have a strategy that is disciplined, but if it’s grounded in something that is so basic and fundamental to our system, I’d like to believe, and I do believe, that the value keeps building.
So, I’m confident.
Average Annual Total Returns (%) as of 12/31/15
| QTR | YTD | 1YR | 3YR | 5YR | 10YR | 15YR | 20YR | SINCE INCEPT. |
DATE | |
| Special Equity | -0.62 | -12.36 | -12.36 | 4.65 | 5.76 | 6.91 | 10.10 | N/A | 8.38 | 05/01/98 |
| Russell 2000 | 3.59 | -4.41 | -4.41 | 11.65 | 9.19 | 6.80 | 7.28 | 8.03 | 6.33 | N/A |
| Annual Operating Expenses: 1.12% | ||||||||||
