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This is a small cap value fund investing 65% in US microcap stocks (<US$500m), with the balance in small caps (<US$1bn). Royce's contrarian style focuses on companies whose prices are depressed and are out of favour. These generally fall into one of four themes: companies selling for less than their asset value, turnaround situations, undervalued growth companies and companies that suffer from a temporary interruption in earnings. Historically the P/B for the fund has been below that of the Russell 2000. The problem of liquidity inherent in this sector is compensated for by the large number of holdings and the contrarian approach the fund adopts. This means purchases are made when the stock is most out of favour and subsequently sold into price rallies when there is more liquidity in the market.