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By Chuck Royce, Chairman, Portfolio Manager, RoyceAssociates (a Legg Mason affiliate) Francis Gannon, Co-Chief Investment Officer, Managing Director, RoyceAssociates (a Legg Mason affiliate)
What drove the resurgence for small-cap value this year?
Chuck Royce: I think a confluence of factors helped value recapture small-cap leadership in 2016. Reversion to the mean was probably the most significant reason. Small-cap value had trailed growth for an inordinately long time, which convinced us that value would lead in a new small-cap cycle. Small-caps experienced a significant bear market from their peak on 6/23/15 through the bottom on 2/11/16, falling 25.7%. We called it a stealth bear market...
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