Veteran Global Small-cap Specialist Launches in Australia

SYDNEY, 28 July 2021 – Global small-cap equity specialist Royce Investment Partners, part of Franklin Templeton, is entering the Australian retail investment market with the launch of a global small-cap fund.

The Royce Global Small-Cap Premier Fund, an unlisted Australian unit trust, is an actively managed, core equity fund. The strategy is driven by fundamental, bottom-up research.

Matthew Harrison, managing director of Franklin Templeton Australia & New Zealand, says: “We are very pleased to offer this Fund to Australian investors, as we believe now is the time to look at varied opportunities
across the global small-cap sector. In our experience, many small-caps are lightly researched or misunderstood by the market which provides ongoing opportunities to invest in attractively valued stocks. 

“Royce, as a specialist active manager across small cap investing, has developed unparalleled knowledge and experience gained through more than four decades of investing. As strong advocates for this asset class, we
believe that including a meaningful allocation within a balanced portfolio to global small-caps can improve many investors’ outcomes,” notes Mr Harrison. 

The Royce Global Small-Cap Premier Fund seeks to invest in high-quality businesses with three key differentiators:

• Exceptional franchises – companies with durable competitive advantages operating in favourable industry ecosystems
• Strong capital allocators – company management teams with histories of disciplined capital allocation
• Businesses with attractive reinvestment prospects – companies with opportunities to reinvest at high returns

The Fund will invest in a limited number of companies, typically between 60 and 85. Royce is targeting returns that exceed the MSCI All Country World Small Cap Index in Australian dollars over three to five years.

No more than 10% of the Fund’s NAV will be invested in any one company. The Fund will not invest in securities listed on the Australian Securities Exchange.

Royce Investment Partners Founder, Chuck Royce, says the firm’s outlook for small-cap companies is positive.

“Small cap stocks have historically outperformed large caps over the long term and have often done particularly well when economies are expanding.

“In the last year or so, the short but deep recession was followed by massive fiscal spending and extraordinary monetary accommodation. Based on our experience as small-cap specialists, we think it made sense that these developments led to the sort of strong move in small caps we’ve seen since the U.S. market trough in March 2020.

“Now we have considerable pent-up demand—which was already growing prior to the pandemic. Along with healthy global financial conditions, the sounder underlying state of the economy is a very strong sign for positive small-cap performance.

“We note that US small caps have so far posted very strong earnings this year, with a majority of companies reporting that they beat expectations and/or beat on the top line.”

Mr Royce is not overly concerned about the “inflation threat”, saying small-cap businesses are generally nimbler than their larger peers and can adjust more easily to inflation.

Founded in 1972, Royce Investment Partners is headquartered in New York. The firm employs 33 investment professionals and has US$17.6 billion in funds under management. In 2001, it became an affiliate of Legg Mason, which is now part of Franklin Templeton.

Learn more about the Fund here.

For all media queries, please contact Simrita Virk
E: [email protected]

About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organisation with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton’s mission is to
help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience. In July 2020, Franklin Templeton completed the acquisition of Legg Mason, Inc. [NYSE:LM] and its specialist investment managers. The newly-combined organisation establishes Franklin Templeton as one of the world’s largest independent, specialised global investment managers with a combined approximately US$1.6 trillion in assets under management (AUM) across one of the broadest ranges of high-quality investment teams in the industry as of 30 June 2021. For more information, please visit www.franklintempleton.com.au.

About Royce Investment Partners
Royce Investment Partners is a small-cap equity specialist offering distinct investment strategies with unique risk/return profiles designed to meet a variety of investors' needs. The firm is generally regarded as a pioneer
in small-cap investing and has focused on this distinctive asset class for more than 45 years, leading to unparalleled knowledge of the smaller-company investment universe. Since its establishment in 1972, the
firm’s strategies have focused on active, risk-conscious investing driven by deep, fundamental company research. Chuck Royce, the firm's founder and a pioneer of small-cap investing, enjoys one of the longest tenures in the industry.

Disclaimers

This publication is issued for information purposes only and does not constitute investment or financial product advice. It expresses no views as to the suitability of the services or other matters described in this document as to the individual circumstances, objectives, financial situation, or needs of any recipient. You should assess whether the information is appropriate for you and consider obtaining independent taxation, legal, financial or other professional advice before making an investment decision.

A Product Disclosure Statement (PDS) for any funds referred to in this document is available from Legg Mason Australia at www.leggmason.com.au. or by calling 1800 679 541. The PDS and associated reference documents should be read before making an investment decision. 

Issued by Legg Mason Asset Management Australia Limited (ABN 76 004 835 849, AFSL 240827) (Legg Mason Australia) which is part of Franklin Resources, Inc. Legg Mason Australia as Responsible Entity has appointed Royce Investment Partners as the fund manager for the Royce Global Small-Cap Premier Fund (ARSN 648 409 009) (Fund).

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