SEIC - Royce Small-Cap Fund Q1 2025 Commentary
2025-05-06 00:39:00 ET
Summary
- Small-caps remain much more attractively valued than large-caps and opportunities are plentiful.
- The Fund’s top five contributors in 1Q25 are longer-term holdings in which we have high conviction.
- We remain confident in the long-term prospects for rebounds in the Fund’s top detracting industries.
- We think it’s important to remember that difficult economic and/or market phases are finite. Those who stand to profit most when a recovery arrives are almost always those investors who stayed the course during stormy weather.
Performance Review
- Royce Small-Cap Fund (PENNX) declined 9.3% for the quarter, outperforming its benchmark, Russell 2000 Index, which was down 9.5% for the same period. The portfolio outperformed its benchmark for the 3-, 5-, 10-, 20-, 25-, 30-, 35-, 40-, and 45-year periods ended 3/31/25.
- All of the portfolio’s 10 sectors made a negative impact on quarterly performance. The sectors making the largest detractions came from Information Technology, Industrials and Consumer Discretionary while the least negative impacts came from Consumer Staples, Materials and Energy.
- At the industry level, semiconductors & semiconductor equipment (Information Technology), electronic equipment, instruments & components (Information Technology), and construction & engineering (Industrials) detracted most for the quarter, while metals & mining (Materials), insurance (Financials), and biotechnology (Health Care) were the largest contributors.
- The portfolio’s advantage over its benchmark was primarily attributable to stock selection in the quarter, with the Financials, Materials and Industrials sectors making the most significant positive impact versus the benchmark. Conversely, Information Technology, Real Estate and Utilities detracted most from relative quarter results.