Royce Investment Partners (“Royce”), investment adviser to The Royce Funds, is pleased to share the news of its 50th anniversary. The firm, then known as Quest Advisory Corporation, was founded in November 1972 by Charles M. Royce. Under the guidance of both Mr. Royce and, more recently, the firm’s executive management team, Royce has grown into a small-cap specialist with unparalleled knowledge and experience, offering distinct investment approaches to meet investors’ goals. As of October 31, 2022, the firm had assets under management of more than $10 billion. Still active in managing portfolios, Mr. Royce enjoys one of the longest tenures in the asset management industry.
When he founded the firm, there was a strong perception that small-cap was too risky an asset class to form the core of a mutual fund portfolio. As Royce’s CEO and Co-Chief Investment Officer Chris Clark commented, “Even on the heels of the success that pioneers like Chuck enjoyed, there were few competitors. According to Morningstar, there were only 13 open-end small-cap funds in 1972. The total began to climb in the ’90s, with 121 funds at the end of 1992, 553 at the end of 2002, and 501 as of the end of September 2022. Even with this remarkable growth, the asset class remains the most inefficient, labor intensive, and exciting segment of the equity markets.”
Two important changes have characterized the company’s recent development. Where for many years Mr. Royce managed all or most of the firm’s assets—which were invested primarily in U.S. small-caps in mutual fund portfolios for U.S. investors—Royce today employs multiple portfolio managers and analysts who manage differentiated strategies that invest in U.S., international, and/or global small-caps in a variety of vehicles available to both U.S. and non-U.S. investors. These changes have better aligned the company with the evolving needs of its clients while positioning Royce to navigate the ever-shifting landscape of the investment management industry.
The firm has also significantly increased the number of its investment professionals over the last two and a half years as part of its commitment to a deep and multi-generational approach to its investment teams. Thirteen of the 30 current professionals have joined Royce since May of 2020—an increase of more than 40% in research and portfolio management talent. This highly intentional growth has been led and implemented by Mr. Clark and Co-CIO Francis Gannon in order to best ensure another 50 years of success.
The firm has been an autonomous Specialist Investment Manager (SIMs) within the Franklin Templeton family since 2020 and sub-advises a range of portfolios for clients in the U.K., Europe, Japan, Australia, and Canada. Royce continues to thoughtfully and intentionally evolve with a long-term view and a resolute commitment to remaining a preeminent small cap specialist. Even with many accomplishments over five decades, Royce has never forgotten that its top priority is delivering strong long-term returns to its many investors across the globe.