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Royce Special Equity Fund to close.

edited February 2012 in Fund Discussions

http://www.sec.gov/Archives/edgar/data/709364/000090630412000359/rse497-212.htm


Effective after the close of business (4:00 p.m. EST) on Wednesday, February 29, 2012, Royce Special Equity Fund will be open only to existing shareholders and existing relationships.

The Fund will remain open to the following:

Existing investors – in their own name or as a beneficial owner of shares held in someone else’s name – for example, a nominee, custodian or omnibus account holding shares for the benefit of an investor would not be eligible to open a new account for its own benefit or for the benefit of another investor, but the investor would be eligible to open a new account in the Fund;


Registered Investment Advisors with existing clients in the Fund. Registered Investment Advisors who currently have clients in the Fund may open new accounts as well as add to existing accounts in the Fund;

Certain pre-approved asset allocation based investment programs and, for a limited time, initial investments by certain institutional investors approved by the Fund’s investment adviser;

Certain pre-approved “Retirement Plans” offered through certain broker-dealers with accounts held on the books of the Fund through omnibus account arrangements (either at the plan level or at the level of the financial intermediary). “Retirement Plans” include 401(k) plans, 457 plans, employer sponsored 403(b) plans, defined benefit pension plans, profit sharing plans, nonqualified deferred compensation plans, other similar employer-sponsored retirement plans and rollover accounts from such plans to individual retirement vehicles such as Traditional and Roth IRAs.



Existing shareholders in other Royce Funds will not be permitted to open new accounts in Royce Special Equity Fund after February 29, 2012 nor will they be permitted to acquire shares of these Funds by exchange. Fund distributions will continue to be reinvested, unless a shareholder has elected otherwise.

Royce reserves the right to: (i) make additional exceptions that, in its judgment, do not adversely affect its ability to manage the Fund; (ii) reject any investment or refuse any exception, including those detailed above, that it believes will adversely affect its ability to manage the Fund; and (iii) close and re-open the Fund to new or existing shareholders at any time.


February 17, 2012




Comments

  • edited February 2012
    What distinguishes this fund from other Royce funds, or other small cap funds in general? I looked at the info on Royce's site but could not figure out what is "special" about it compared to other Royce offerings.
  • If you use the fund comparison tool:

    http://www.roycefunds.com/Tools/Comparefunds/

    Some of the differences in the focused fund category, which it is classified as, is it is less volatile, different manager(s), and different fund category (small blend), market cap., AUM, from the other focused funds to name a few differences.

  • edited February 2012
    Reply to @claimui: I hold this fund in my Roth and am pleased with it. The name is, as far as I can tell, just the name. Perhaps its related to the fund's role in Royce's earlier lineup. But I still think it has merits regardless of the name.

    RYSEX is a focused portfolio focused oriented toward small and micro caps (although the fund can, and has, ventured into the mid-cap and large-cap space). Manager Charlie Dreifus seeks out deep-value plays after intensive research and pouring through its books. In the past, these firms have tended to include a number of micro cap or predominantly family-held companies. Dreifus is not afraid to hold cash if he can't find anything that meets his criteria. Its not unusual to see the fund have a >15% cash stake during market upswings. As a result, the fund lags when the market is rocketing forward, but holds up rather well when the bubble bursts and generates steady, low-volatility returns. I use it as one end of a "barbell" strategy in the domestic small cap sleeve of my portfolio. Of note in this regard is that RYSEX, unlike so many of the Royce funds, is truly a US small/micro cap fund; Dreifus doesn't play the Royce game of letting the fund take on 25-30% international exposure while still benchmarking it to the Rusell 2000. The fund may also be less GARP-y than other Royce offerings.
  • edited February 2012
    Thanks to TheShadow and Shostakovich for the explanation. I do wish the fund names and strategy descriptions were a little more to-the-point. Anyway I compared RYSEX to Royce Value (RYVFX) which I held until recently. I see that RYSEX is more focused on small/microcaps vs. Royce Value (and other Royce funds) which have drifted into midcap space. Also RYSEX has a significant cash holding and took less of a beating during downturns.

    As mentioned I held RYVFX until recently. The performance was fine, but the fund had gone too much into the midcap space and the AUM growing rapidly with no apparent decrease in fees. I also felt the manager was running too many funds. RYSEX doesn't seem to have these problems. They are closing the fund at around $1 billion and the manager only runs two funds at Royce (with apparently similar strategies).

    This seems like it could be an interesting "conservative" small cap holding. I already hold ARIVX so I don't think there is a place for RYSEX in my portfolio, but my be worth a look for other folks.
  • Reply to @claimui: Dreifus runs only two funds. Until the Legg Mason take-over he ran just the one fund. In the past year or so, after Dreifus got some big recognition for side-stepping the 2008 debacle, Royce comes out and announces the launch of the "Royce Special Equity Multi-Cap Fund". Another copycat fund from Royce. I like RYSEX just the same, however, and will keep my eye on it. I have two holdings with Royce at the moment, but always have my eye out for a switch because of my growing distrust in the firm.
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