MutualFundWire.com: 50 Years, $10B In AUM, and 11 Funds

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Tuesday, November 15, 2022

50 Years, $10B In AUM, and 11 Funds

The team at a small-cap-equity-focused boutique asset manager is celebrating a big milestone.

Charles M. "Chuck" Royce
Royce Investment Partners
Founder, Chairman, Portfolio Manager

This month is the 50th anniversary of the launch of what is now Royce Investment Partners. The New York City-based fund firm (a subsidiary of a publicly traded asset management titan, Franklin Templeton) had more than $10 billion in AUM as of October 31. The team now offers 11 open-end mutual funds, three closed-end funds, two annuity portfolios, and one SMA product. (They also subadvise an ETF for their parent and do other subadvisory work.)

Chuck Royce founded his eponymous firm in November 1972 when he acquired Quest Advisory Corporation (which he gradually transformed it into his own mutual fund company) and took over what is now the Royce Pennsylvania Mutual Fund. Legg Mason bought Royce IP in 2001, and in 2020 Franklin bought Legg. Royce remains on board as chairman and portfolio manager, and the firm now has a team of 30 investment professionals; that's up from than 40 percent since 2020. Royce IP is now an autonomous "specialist investment manager" (SIM) within the Franklin family.

Royce and Chris Clark, president and co-chief investment officer of Royce IP, offer reflections on the firm's 50 years in business and how things have changed.

"Small-cap has gone from being obscure and misunderstood to an established and institutionally recognized asset class," Royce states.

When I began my career as an analyst, small-cap was not seen as an asset class of its own — that is, one that had its own distinctive investment attributes, performance patterns, etc. To the degree that it was recognized, investors saw it as the place you went to find one or maybe a few highly risky growth stocks. With Penn, I was trying to do something innovative that went against the current.

Clark underscores how Royce IP's investment process has shifted over the years, away from Royce himself leading most of the firm's strategies and to a multi-PM structure instead. And he lauds Franklin as "both a key resource and supportive partner" for the boutique.

"They are both a key resource and supportive partner, and their global distribution team continues to provide increased reach for our products," Clark states. "Over the last 50 years, we have developed unparalleled experience in small-cap investing that provides us with a deeper understanding of the nuances and lingering misperceptions about the asset class."

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