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Royce Launches New Mid-Cap Fund

Plus, a shocking week for the fund industry.

Morningstar Analysts, 12/21/2009

Royce announced the launch of its first mid-cap fund, Royce Mid-Cap. It will invest primarily in the equity securities of companies with market capitalizations from $2.5 billion to $15 billion that Royce believes are trading below its estimate of the firms' current worth.

This is a big step up from the smaller companies Royce typically focuses on. Royce SMid-Cap Value RMVSX, for example, focuses on companies with market caps between $500 million and $10 billion.

As is typical with most of Royce's funds, this fund will generally invest in companies that have excellent business strengths, have high internal rates of return, and exhibit above-average prospects.

The portfolio management team includes Carl Brown, Brendan Hartman, James Stoeffel, and W. Whitney George. Its expense ratio will be capped at 1.49% though April 30, 2012.

Royce's fund lineup has performed well in recent years, particularly in 2008. Charlie Dreifus, manager of Royce Special Equity Investment RYSEX, is a nominee for Morningstar's Domestic-Equity Manager of the Decade award.

A Shocking Week for the Fund Industry
The mutual fund industry is ending 2009 with a bang. TCW's former star manager Jeffrey Gundlach, a candidate for Fixed-Income Manager of the Decade, has been all over the news. First, he left TCW. Then he announced the launch of his new firm Doubleline. That left TCW Total Return TGLMX shareholders wondering, "Should I stay or should I go?" To which Morningstar's head of fixed-income research Eric Jacobson answered, it's safe to stay. Meanwhile, the possibility of investors leaving in droves to follow Gundlach has so far turned out to be not as big an issue as feared.

There were other surprises this week T. Rowe's TROW new head of fixed income raised more questions than he answered. AMG bought Aston funds. And the fund industry lost a legend when Tweedy, Browne's Chris Browne died of a sudden heart attack.

Wells Fargo Loses Bond Manager to Loomis Sayles
Loomis Sayles recently named Bill Stevens, a long-tenured comanager at Wells Fargo Advantage Total Return Bond MBFAX and Short-Duration Government MSDAX, a vice president and portfolio manager.

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