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By Karin Anderson | 10-21-2009 05:34 AM

Royce: Market Getting Back to Normal

Royce Funds president Chuck Royce says we're evolving back to where quality and dividend paying will have a real value in the next couple of years.

Karin Anderson: Hi. This is Karin Anderson, mutual fund analyst with Morningstar. I'm here today with Chuck Royce, president of the Royce Funds and portfolio manager of several funds at the firm.

Hi, Chuck. How are you today?

Chuck Royce: Great.

Anderson: Great. Thanks for being here. Maybe you can talk to us first of all about kind of the state of the market right now. We've had several months of a strong rally. You've talked to your shareholders about all the deep discounts are a thing of the past at this point. So what does that mean for the funds that you run?

Royce: I think it opens up a different platform, a different opportunity set. It's not, of course, anywhere as near as strong an opportunity that it was six months ago.

We virtually had a straight-up run. I do think we're in a now evolving sort of more normal period. A more normal period, I think, in the market will have, from time to time, 5%, 10% corrections. There will be more of a specific opportunity at the specific stock level. That's something we certainly look forward to.

We're always interested when the market has misinterpreted short-term data, an earnings miss, et cetera, and has failed to recognize the long-term opportunity. That's our cup of tea.

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