Legg Mason Royce US Small Cap Opportunity X GBP

A small/micro cap US equity fund with a value/contrarian bias.

  • 18013.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 1.25%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 0.00%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 22 May 2020

This is an offshore (Dublin listed, distributor status) small/micro cap US equity fund with a contrarian approach benchmarked against the Russell 2000 index. The fund is managed from New York by Royce Associates, a wholly owned subsidiary of the Leggmason Group. Royce are small cap specialists and one of the largest operators in their sector in terms of resources and funds under management.

Fund summary

Sector
Structure OFFSHORE FUND
Launched January, 2013
Size £272m
Yield 0.00%
Charging basis
Dividends paid Acc units only

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 1.25%

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Investment process

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.

Manager research

Average monthly relative returns

  • 15/16 0.00%
  • 16/17 0.60%
  • 17/18 -0.67%
  • 18/19 0.24%
  • 19/20 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.30%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 87.70%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

William Hench

Hench is Portfolio Manager and Senior Analyst for Royce & Associates. In addition to his role as Portfolio Manager of the Royce U.S. Small Cap Opportunity Fund, he serves as Co-Portfolio manager of Royce Institutional Fund - Opportunity Portfolio and Assistant Portfolio Manager for the US-domiciled Royce Opportunity Fund both with Boniface (Buzz) Zaino. He joined Royce & Associates in 2002 after spending 10 years in the institutional equity business in Boston and New York, most recently with JP Morgan. After receiving a bachelor’s degree from Adelphi University in 1986, Hench began his professional career as a CPA in 1989 with Coopers and Lybrand.

Track record

William Hench has 4.6 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.3%. During the worst period of relative performance (from February 2011 - September 2011) there was a decline of 15% relative to the index. The worst absolute loss has been 31%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 88%.

Periods of worst performance

Absolute -31.00% (April 2011 - September 2011)
Relative -15.00% (February 2011 - September 2011)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 28 February 2009

1.22% Rent-A-Center
1.18% Tekelec
1.11% EarthLink Inc
0.99% Bottomline Technologies
0.91% Collective Brands
0.90% Giffon Corporation
0.90% PharMercia Corp
0.89% M.D.C. Holdings
0.89% Crane Co
0.89% Park Electrochemical
Source: Legg Mason Global Funds Plc

Portfolio

200-250 stocks.

Constraints

Maximum positions are typically 1%, positions will initially be built to 0.3%.

Key Investor Information

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