Higher Interest Rates Create More Market Volatility, an Advantage for Stock Pickers

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Jul 07, 2015, 07:00 ET

NEW YORK, July 7, 2015 /PRNewswire/ -- Small-cap investment veteran Chuck Royce and Royce Funds Co-CIO Francis Gannon share their take on 2015's results for stocks. In this timely market perspective, Mr. Royce and Mr. Gannon discuss the positive effects of higher interest rates and increased volatility on stock prices and the handful of sectors where they see untapped potential.

Mr. Royce explains, "Higher rates create more uncertainty, be it about inflation, the cost of capital, or a number of other issues. This in turn typically leads to more mispricing in the short run, which creates opportunities for us as bargain hunters." Particularly, these opportunities are presenting themselves in economically sensitive areas of the market.

Mr. Gannon comments, "High rates are synonymous with higher risk. They are nearly always correlated with a greater number of mispriced companies. So we're not worried about rates rising or greater volatility in the markets. In fact, we welcome both."

Read the full market perspective at RoyceFunds.com

Important Disclosure Information

Mr. Royce's and Mr. Gannon's thoughts and opinions concerning the stock market are solely their own and, of course, there can be no assurance with regard to future market movements. No assurance can be given that the past performance trends as outlined above will continue in the future.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Distributor of The Royce Fund: Royce Fund Services, Inc.

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SOURCE The Royce Funds