The fund is run by Charlie Dreifus. This is one of two funds he manages and at the other - Royce Special Equity (RYSEX), which is now closed - he got M* Domestic-Stock Manager of the Year award in 2008 and was a finalist for Domestic-Stock Manager of the Decade in 2010.
Yet, I did a search of the Discussion Board and found only three references to RSEMX by full name "Royce Special Equity Multi-Cap" and one by main ticker (none w/ other share classes: RSMCX, RMUIX) - largely in the context of funds opening/closing. What gives!?
According to M*, Dreifus has $3.1B managed total - not a small amount, but by today's standards quite reasonable.
Performance since fund's late 2010 launch has been, in M* words as expected given manager Charlie Dreifus's cautious style. And while 1.39% annual expense ratio is a bit on the high side, the fund is small @ $94M, so this may be acceptable - especially, given that a smaller fund could be more nimble going into likely turbulent markets.
M* also gushes over fund's Royce parent as an industry-leading example of managers aligning their interests with those of fundholders, whose distinctive and enduring small-cap culture is particularly impressive considering it has had a big owner.
So, why so little interest in the fund among MFO members?
Comments
There may be very good funds within Royce, but I think some have been dismayed by aspects of the parent company.
Another reason might be because this fund, I think, is in the mold of other conservatively managed funds like ARIVX, ICMAX and to a lesser extent, the Forester funds. These types of funds excel at capital preservation in down markets and win over longer market cycles. Buy and hold, sleep easy type funds.
What I've learned from reading FundAlarm and now MFO, is that people like to talk and learn about new funds and often hot funds. I like to hear about new ideas. But funds like RYSEX, PRBLX and SEQUX and many other well managed funds that don't get much discussion certainly don't go unnoticed by those doing their homework- like yourself.
Royce has numerous funds with very low assets as many of them were hard to distinguish their offerings from existing funds.
Again, I can certainly see why investors aren't jumping all over for this new fund as they still have to prove themselves in the mid-largecap space.
And also - there's nothing really special about the fund, it's targeting mostly quality largecap names and you already have ample competition in that space including the well run Yacktman funds and many others. Another one is FMIHX --- another very good multi-manager shop and this fund has done a fine job so far and similar to RSEMX, they focus on quality large-cap names.
ARTGX also is in that similar high-quality value investing style but globally.
Then you also have SPLV - the Low Volatility S&P 500 Fund that has already racked up over $2B in assets!
The Vanguard Dividend Appreciation Fund which also tends to hold the largecap high-quality wide-moat firms that can sustain dividend growth has over $11B in assets.
So with everything mentioned here about the dearth of already good options in the quality largecap stock space plus Royce having a sea of so many similar funds plus still needing to prove that they can standout in the largecap space --- is no surprise to me that RSEMX still has such low assets.
RSEMX clearly has not "caught on" and has only ~ $94M across all share classes. This in and of itself might not be surprising, given middling performance by a conservative manager in the overall up market. What surprised me was a lack of interest among MFO members in the only open fund by a manger with proven couple decade-long track record of very successful conservative investing - a profile which is generally well-appreciated here.
Yes but as I outlined below - he still has to show that he can excel in the Largecap space. If Eric Cinnamond offered a concentrated Largecap fund tomorrow would you jump all over it? I certainly wouldn't.
Plus there are already many well established and great largecap choices to choose from already. FMIHX has already attracted a healthy following of investors and actually I would prefer it over RSEMX if I had to make a choice right now, especially more so since FMIHX is less expensive.
I think you bring up an excellent point - or, at least, the most cogent one to me - in terms of expanding into new mid-large cap space. I will post the rest of my reply after your post below.
And, yes, I would invest in Eric Cinnamond even if he offered a sector Oceania fund!
Maybe just put a little less money in...
...but only to start with - I am sure he would do fine!
- Dissatisfied with Royce as a fund family. You might see Dreifus as being different because he only manages two funds ... or you might look at it as part of Royce's trend of opening more funds without a compelling rationale.
- Relatively high expense ratio. I see that RYSEX's fee is relatively low, so maybe RSEMX's fees will go down as assets increase... maybe.
- Not much evidence that Dreifus will excel in the large cap space. I think there is more opportunity for a concentrated stock picker to stand out in the small cap arena because there are a lot more investment options and comparatively less analyst coverage. Large cap investing probably demands a different set of skills.
- Many existing options for mid/large cap funds with proven track records. Besides the ones mentioned previously, let me also throw out APPLX / APPIX (which I hold and was recommended by a poster here) -- but this is just one more out of many options.