Looking for global small cap exposure and willing to pay a higher expense ratio if it is deserved. I currently have RIVFX, but have been concerned with Royce's willingness to let their "small" cap funds accrue assets in excess of $5 billion. I am thinking of jumping into GPGOX due to the fact that the managers have historically closed their funds before they get too big thus warranting the higher exp ratio. Any thoughts on this would be greatly appreciated, especially from Royce lovers.
Comments
But I believe Royce does close the funds somewhat early if they are concentrated funds such as what they did in the past with RYSEX well below $5B. Some of their funds that have grown large have like 300 stocks in them.
RIVFX is somewhat or moderately concentrated and so I don't expect them to let it grow really huge. I'm also not worried because assets haven't been pouring in like gang-busters --- so i don't see a capacity issue for a long-time.
I also like the country distributions of both funds.
RPFFX is a more concentrated "best ideas" fund that did not close until it was close to 6 billion (the second time if I remember correctly).
RYVPX started out as a much more concentrated version of its former self that had a much smaller market cap than it does now and had incredible returns. Now it seems to struggle to beat its index and has moved over a billion or more up the market cap ladder. I owned RYVPX until it crested 2.5 billion in assets.
It does look like the flow of money into RIVFX will not be as aggessive as the previous two...mainly due to expense ratio reasons and mandate (in my opinion), but if this fund takes off like it did a few years ago then I am not sure if Royce will turn off the spout.
It was pretty unfortunate what happened to RYVPX.
I had posted this before and here's a response by Eric to my inquiry about their team and exposure/handling of EM investing....
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One of the key reasons for leaving Wasatch to start our own firm was to be able to structure our research team with global analysts who would truly be analyzing and comparing companies from all corners of the world. At Wasatch, Blake and Robert were traveling to Emerging Markets and investing in Emerging Markets. You are correct that there were other members of the Wasatch international team also searching those markets for interesting opportunities, and Robert and Blake shared ideas back and forth with those team members.
At Grandeur Peak, we are exploring emerging markets in a very similar fashion, and again expect that they will comprise a meaningful section of the portfolios. On the Grandeur Peak team we have four additional analysts beyond Robert and Blake to help cover the world. In specific reference to Emerging Markets:
• Amy Sunderland, is first a global analyst on Consumer and Healthcare companies, but she spends much of the year in Hong Kong, is originally from China, speaks Mandarin, and is a secondary analyst on China/Asia for us
• Randy Pearce is first our Financials analyst for the entire world, but secondarily he has lived in Brazil, speaks Portuguese, and is a secondary analyst on Latin America for us. He just returned from a week in Brazil with Amy Sunderland last month.
• Spence Stewart is our newest analyst and speaks French and Spanish. He has already spent a week in Korea, and is on his way to South Africa later this month.
• Rob Green is our Quantitative Analysts and manages our rigorous screening process through which we will screen over 30,000 companies around the world every year in search of what we believe are some of the best companies and investments. These screens include both emerging and frontier markets.
Searching the world is certainly a lot of ground for us to cover. We aggressively built out a 6-person research team before even launching our funds because we believe having the right research team is the single most important element to our success. We have an experienced and energized team. To effectiveky cover the world, It will be critical for us to follow our disciplined screening process, and then you’ll find our team on the road a lot. In time we hope to expand the team by a few more members, but Robert and Blake feel really good about the initial team we have in place.
For large caps, I have Oakmark Global and First Eagle.
Anyway, as to RYVPX; I used to own it. The fund has not done well. I sold it when I had a gain on it, and went into RYSEX. Check your latest annual report from Royce, toward the back you can track redemption/additions figures. Folks have been leaving RYVPX in droves. Not that it was easy to benchmark because, like most Royce funds, it can have (and has had) a significant international stake (yet Royce continues to peg its performance to the Russell 2000, etc.).
The culture at Royce has changed greatly since Chuck sold out to Legg Mason. M* is still in the tank for them, though.
Instead of a Royce, Grandeur Peak, or Wasatch global SC/MC fund -- all of which are very expensive -- I suggest that you consider combining VSS (0.33% ER) with a domestic SC fund like HSCSX (1.18% ER, AUM $226M). Equal parts of these funds would give you the following M* portfolio x-ray:
LC: 0/0/0
MC: 14/16/14
SC 23/22/10,
with an overall ER of 0.76% and an average market cap of $1.2B.
Kevin