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Legg Mason IF Royce US Smaller Companies Inclusive - Class A - Accumulation (GBP)

Sell:372.20p Buy:372.20p Change: 4.70p (1.28%)
Prices as at 6 July 2020
Sell:372.20p
Buy:372.20p
Change: 4.70p (1.28%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 6 July 2020
Sell:372.20p
Buy:372.20p
Change: 4.70p (1.28%)
Prices as at 6 July 2020
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund is on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. However, this is not a recommendation to buy.

Smaller companies often have high growth potential. They can be under-researched too, because most investors focus on larger businesses. So they're an exciting investment proposition with a better chance of finding a hidden gem. It's also a higher-risk area though, so this is a more adventurous way to invest in the US.

We think an experienced team is vital when it comes to smaller companies. Lauren Romeo is part of a team that's been investing in US smaller companies since the early 1970s. We like their consistent approach that tries to find companies with underappreciated growth potential. We think it's got the potential to deliver excellent performance, but a long-term view is essential.

Our view on the sector

UK investors need little introduction to America. It's the world's biggest stock market and is home to world-leading companies in almost every industry there is, from media and film, through to manufacturing and transportation. We think most diversified portfolios should have some exposure to the US market. But it's one of the most heavily researched in the world so share prices of well-known companies can react quickly to new information. We think this can make it more difficult for fund managers to find opportunities missed by others and to consistently perform better than the broader market over the long term. Many funds investing in the US aim to grow the value of your original investment, rather than pay a high level of income. Some focus on the largest companies in the market. Others look for opportunities amongst small and medium-sized companies, which may offer greater growth potential, but are higher risk.

Performance Analysis

The Royce team has a good track record stretching back to 1993. Since then, they've done better than the benchmark index they're measured against.

The low interest environment we've seen in recent years hasn't suited the manager's style though. It's benefited the kinds of lower-quality companies she avoids by making it cheap for them to keep borrowing money. The higher-quality businesses she targets have been left behind. The fund's still delivered positive returns, but hasn't risen as quickly as the stock market. It's normal for investment styles to go in and out of fashion. We expect Romeo to capitalise when her approach is back in vogue, but there are no guarantees.

Investment Philosophy

The manager seeks out companies that are unpopular with investors. She thinks this can provide opportunities to buy shares for less than their true value.

Process and Portfolio Construction

The companies Romeo's looking for could well be facing headwinds, so it's important they don't have too much debt. Romeo and her team spend a lot of time meeting with a company's managers to make sure they've got the skill and experience to turn the business around. They also speak to customers, suppliers and competitors to make sure the managers are actually executing their plan.

All their analysis leads them to what they think a company's shares should be worth. They're looking for situations where the shares can be bought for significantly less than they think they're worth.

They won't get it right every time and when they do, it can take time for other investors to realise the opportunity and force the share price up. There'll be periods where the fund underperforms and seems at odds with the wider market, so this style of investing requires patience.

question mark Manager Track Record Based on HL Quantitative Research

  • ROYCE PREMIER FUND-INV CLASS
  • ROYCE 100 FUND-SV
  • Legg Mason IF Royce US Smaller...
  • IA North American Smaller Companies
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Fund Track Record

06/07/15 to 06/07/16 06/07/16 to 06/07/17 06/07/17 to 06/07/18 06/07/18 to 06/07/19 06/07/19 to 06/07/20
Annual return 6.50% 24.82% 12.79% 1.49% -7.08%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Fund Management Group Comment

Legg Mason is one of the world's largest asset managers, dedicated solely to managing money. With over 100 years of history Legg Mason has built up a strong heritage and manages funds across global equity and fixed income markets.

The most distinctive feature of Legg Mason is its specialised approach to managing money. It houses a selection of prestigious investment management businesses, each focusing on its own area of expertise. These specialist investment managers include Legg Mason Capital Management, Western Asset, Royce & Associates, Brandywine Global Investment Management and Batterymarch Financial Management - each a wholly-owned subsidiary of Legg Mason. Legg Mason believes in encouraging its investment managers to follow their own investment processes and make their own investment decisions.

Information about the fund

Fund manager biography

manager photo
Manager Name: Royce & Associates
Manager start date: 29 March 2004
Manager located in: New York

Royce and Associates (Royce) devotes all of its time and resources to managing smaller-company investment portfolios. This focus distinguishes the Firm from most other asset management firms. Smaller-company value investing is Royce's only business. The Firm pays close attention to risk and maintaining the same discipline, regardless of market movements and trends. Royce is a wholly owned subsidiary of Legg Mason, Inc.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account