Latest summary prospectus from Royce on their Micro Cap Fund (RYOTX) specifies that the fund is allowed to invest up to 35% of its holdings in foreign companies (10% emerging markets).
That's a dramatic change from the 2010 summary prospectus which lists the foreign ceiling as 25%. And, yes, Royce offers an international micro cap fund (new this year), but no global micro cap fund.
No matter, Royce continues to benchmark the performance of RYOTX against Russell 2000 and Russell Micro Cap.
Good shop, good fund, but more shenanigans.
Comments
We own a foothold in RYOTX, and no more, as Royce has consistently demonstrated questionable fund stewardship with way above average expense ratios. For example, RYOTX has $1.5B in AUM with a 1.50% net expense ratio, which includes an exorbitant 1.3% management fee. I watched this fund grow in AUM with no significant decrease in the net expense ratio, and I eventually decided to sell the fund down to a foothold as a matter of principle.
If one desires a global exposure to SC, I would definitely prefer 50/50 combinations of VSS/PARSX (combined ER 0.76%) or VSS/WSCVX (ER 0.90%) over RYOTX.
Kevin
Anyway, good points on Royce. My wife and I both own a Royce fund or two. I'm always on the lookout for alternates, because they've changed quite a bit since Legg Mason took them over. I've stayed in RYOTX because I figure as a micro-cap fund it had to close sooner or later.
Well, it did. But they also changed the fund's mandate and opened an international micro-cap fund. With Royce, its almost always about AUM (and, pulling the bait-and-switch with Whitney George).
I've ranted about Royce before, but just had to post when I saw this recent change with regard to RYOTX's mandate. Even Royce Opportunity (RYPNX) has changed recently.
If anyone knows of good, low expense, shareholder-friendly small cap funds, please pass them along (pre-emptively I'll say that I've looked at T.Rowe's -- they don't fare as well as Royce's by my metrics).
Take a look.
Most all of Royce's funds are allowed to invest up to 20% international. That figure is an increase from their previous guideline of 10%. But regardless -- all of Royce's funds are benchmarked against the small cap index. Even the portfolios that are over 30% midcap.
Royce is by far the worst offender I know of in terms of the benchmark nonsense.
I chuckle when lowly TIAA-CREF goes to great lengths to create a benchmark for their social choice fund, while Royce puts out a fact card showing that 80% (or whatever it is) of their funds beat their Russell 2000 (etc.) benchmark over 5 and 10 years.
Its flat-out dishonest. At best they drag out some line about "absolute returns".
And I'd bet dollars to donuts that they expand the international % so that they don't have to close the funds.
Royce sold his name, he didn't have to sell his soul.