This is a marketing communication.
US smaller companies offer an interesting return profile, while more volatile than their large cap peers, they often lead the way after a market slump or recession.
Our portfolio managers are deeply engaged with the companies they invest in. We prioritize high-quality companies that we believe are ideally positioned to seize the attractive opportunities in US small-cap stocks.
We believe these should help the fund limit downside volatility in periods of market stress while performing competitively in up markets.
The FTF Royce US Smaller Companies Fund is built on Royce’s Premier Quality approach, which the firm has been employing successfully for over three decades. This approach focuses on:
Leading companies with a consistent history of superior profitability.
Companies that avoid high leverage.
Quality businesses that can generate excess cash flow with attractive prospects.
Stocks selling at valuations that we believe do not fully reflect their business prospects.
The FTF Royce US Smaller Companies Fund is a high active share strategy, which uses a bottom-up driven stock selection approach to build a relatively concentrated portfolio.
It invests with a long-term horizon, in order to benefit from the compounding of returns over time by these premier quality companies.
Royce has found that other investors often underestimate the sustainability of the returns of this select group of high-quality businesses.
The FTF Royce US Smaller Companies Fund was launched in it's original form in 2004 and is managed by Lauren Romeo, who has been involved since inception in March 2004.
I’m looking for small-cap companies with high returns on invested capital that I believe can compound value by reinvesting current earnings back into the business at high rates of return for long periods of time. I aim to buy when the stock price is depressed due to cyclical or temporary company-specific issues.”
Portfolio Manager
19 years at Royce
30 years of experience
Lauren is supported by the Royce team who have 38 investment professionals, with the entire team focused on small cap investing.
Lauren Romeo joins Joseph Hill in the Hargreaves Lansdown’s studio for an episode of meet the manager.
Dedicated small-cap specialists
Unique asset class knowledge
Substantial ownership
We offer UK investors a diverse range of active and passive strategies – from growth to value and equity income and from mega cap to small cap.
Footnotes:
What are the Key Fund Risks?
FTF Royce US Smaller Companies Fund
The value of shares in the Fund and income received from it can go down as well as up and investors may not get back the full amount invested. Performance may also be affected by currency fluctuations. Currency fluctuations may affect the value of overseas investments. There is no guarantee that the Fund will meet its objective.
The Fund does not offer any capital guarantee or protection and you may not get back the amount invested. The Fund is in its risk/reward category because investments in shares of small cap US companies from various sectors have historically been subject to large fluctuations in value. As a result, the performance of the Fund can fluctuate significantly over relatively short time periods.
Risks materially relevant not adequately captured by the indicator:
Concentration risk: the risk that arises when a fund invests in relatively few holdings, few sectors or a restricted geographic area. Performance may be more volatile than a fund with a greater number of securities.
Single Country/Region Risk: This fund invests primarily in the United States, which means that it is more sensitive to local economic, market, political or regulatory events in the United States, and will be more affected by these events than other funds that invest in a broader range of regions.
Equity risk: prices of equities may be affected by factors such as economic, political, market, and issuer-specific changes. Such changes may adversely affect the value of the equities regardless of company-specific performance.
Foreign Currency risk: the risk of loss arising from exchange-rate fluctuations or due to exchange control regulations.
Investment in smaller company shares: The fund buys shares in smaller companies. It may be difficult to sell these shares, in which case the fund may not be able to minimise a loss on such shares.
Liquidity risk: the risk that arises when adverse market conditions affect the ability to sell assets when necessary. Such risk may be triggered by (but not limited to) unexpected events such as environmental disasters or pandemics. Reduced liquidity may have a negative impact on the price of the assets.
For a full discussion of all the risks applicable to this Fund, please refer to the “Risk Factors” section of the current prospectus of Franklin Templeton Funds.
Important Legal Information
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This webpage is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares of the sub funds of Franklin Templeton Funds ("FTF"), a UK-domiciled OEIC ("the Fund"). Nothing in this document should be construed as investment advice. Subscriptions to shares of the Fund can only be made on the basis of the current prospectus, the relevant Key Investor Information Document ("KIID") or Supplementary Information Document ("SID") accompanied by the latest available audited annual report and the latest semi-annual report if published thereafter, which can be found on our website (www.franklintempleton.co.uk) or from the address below. US Persons (as more fully defined in the latest Fund prospectus) are not eligible to invest in the Fund. Shares of the Fund are available for sale and distribution in the UK.
An investment in the Fund entails risks which are described in the Fund's prospectus and the relevant KIID. The value of shares in the Fund and any income received from them can go down as well as up, and investors may not get back the full amount invested. Past performance is not an indicator, not a guarantee, of future performance. Where a fund invests in a specific sector or geographical area, the returns may be more volatile than a more diversified fund.
Opinions expressed are the author's at the publication date and they are subject to change without prior notice. Given the rapidly changing market environment, Franklin Templeton disclaim responsibility for updating this material. References to particular industries, sectors or companies are for general information and are not necessarily indicative of a fund's holding at any one time. Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes and is provided to you only incidentally. Franklin Templeton shall not be liable to any user of this document or to any other person or entity for the inaccuracy of information or any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission.
There is no guarantee that the Fund will achieve its objective. For a free copy of the latest prospectus, the SID, the relevant KIID, the annual report and semi-annual report, if published thereafter or for more information about any Franklin Templeton fund, UK investors should contact: Franklin Templeton, Telephone: 0800 305 306, Email: [email protected] or write to us at the address below. Alternatively, the information can be downloaded from our website www.franklintempleton.co.uk. Issued by Franklin Templeton Investment Management Limited (FTIML) Registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority.
