FYI:
Regards,
Ted
Dear WEALTHTRACK Subscriber,
As you, our regular “WealthTrackers” know, we and our guests are big believers in portfolio diversification, among geographical areas, asset classes, business sectors and securities. It’s a big, diverse investment world out there and we are always searching for opportunities especially in underappreciated and overlooked areas. This week we are focusing on a gigantic one hiding in plain sight.
It’s international small company stocks, and here’s what we learned about them courtesy of research from Royce Associates, which has specialized in small cap stocks for nearly half a century.
Only about 1% of mutual fund assets in the U.S. are invested in international small cap stocks, but there are more than twice as many foreign small cap stocks than there are U.S. ones in their respective indices, nearly 4800 versus less than 2,000 here. Not surprisingly, they have more than twice the market value, $5.4 trillion overall versus $2.5 trillion for the U.S. universe.
What about performance? Once again they seem to have an advantage. Royce looked at rolling annualized 10 year returns since 1996, when the benchmark, Russell Global Indexes were started. International small caps have delivered 8.3% annualized returns, versus 7% for American small caps and both of them substantially outperformed large cap stocks, whether international or domestic.
What about the volatility that small company stocks are famous for? It turns out that international small cap stocks have demonstrated less volatility than U.S. ones.
This week’s guest, David Nadel, runs a high performance international small cap fund which is starting to get some attention. Nadel is Lead Portfolio Manager of the Royce International Premier fund which he has managed since its 2010 inception. The fund is small but growing rapidly. It crossed the $100 million mark in 2017 and the $200 million threshold this year, and is expanding fast.
A major reason it is attracting investors is the fund’s track record. It has outperformed its international small cap benchmark for the last one, three and five year periods and since inception.
Royce International Premier is also rated 5-star by Morningstar and recently won an award from Thomson Reuters Lipper, another prominent mutual fund ratings firm, for its three year track record.
I asked Nadel why international small cap stocks have a better long term track record than U.S. ones, and why he think that history is poised to continue.
We also have an exclusive EXTRA interview with David Nadel about how he learned the power of recurring cash flows early. His Dad, Warren Nadel was a dentist by profession but was also a successful song writer, guitarist and singer who wrote a number of top ten hits for Elvis and performed with Chuck Berry as a guitarist and singer.
If you miss the show on Public Television, you can always watch it at your convenience online. If you have comments or questions, please connect with us via Facebook or Twitter.
Thank you for watching. We hope you have a wonderful weekend and a special Mother’s Day. As always make the week ahead a profitable and a productive one.
Best regards,
Consuelo
Video Clip:
M* Snapshot RIPNX:
http://www.morningstar.com/funds/XNAS/RIPNX/quote.htmlLipper Snapshot RIPNX:
https://www.marketwatch.com/investing/fund/ripnxRIPNX Is UnRanked In The (F-S/M G)) Fund Category By U.S. News & World Report:
https://money.usnews.com/funds/mutual-funds/foreign-small-mid-growth/royce-international-premier-fund/ripnx 
