e-fundresearch: Mr Whitney George, you are fund manager of the Legg Mason Royce Smaller Companies Fund (ISIN: IE0034390439). Since when do you manage the fund?
George: January 1, 2007
e-fundresearch: Do you use a benchmark, if yes, which one?
George: Russell 2000 for performance reporting purposes; However, we do not manage the Fund against the index.
e-fundresearch: Do you also manage other funds or mandates? If yes, which ones?
George: In the United States I manage or co-manage Royce Low-Priced Stock Fund, Royce Premier Fund, Royce Value Fund, Royce Global Value Fund, Royce Focus Value Fund and Royce Focus Trust.
e-fundresearch: What are the assets under your management? (under your personal management actually)
George: $4.5 billion.
e-fundresearch: Which performances did you achieve in 2003, 2004, 2005, 2006, 2007? Please state in relative terms as well as compared to the benchmark
George: Year to date the Legg Mason Smaller Companies Fund achieved a performance of 5.48% whereas the Russell 2000 lost 1.81% as of April 30, 2009. The performance figures for the previous years are the following:
e-fundresearch: Are you happy with your performance in the recent years and in 2009?
George: 2008 performance was very disappointing in that all equity strategies went down significantly. Year-to-date 2009 in much more in line with what we expect in terms of relative and absolute performance.
To date – 5/14/09 the Fund was up 6.7% versus a decline of 3.1% for the Russell 2000.
e-fundresearch: Which results would you rate as very good, okay and poor?
George: Our results in 2008 were poor; long-term the results of the Fund are good.
e-fundresearch: How do you generate alpha for your investors?
George: Through superior stock picking and by paying attention to risk.
e-fundresearch: Since when are you a fund manager?
George: I joined Royce in 1991 and have been working on portfolios since that period.
e-fundresearch: What have been your greatest success and disappointments in your fund manager career?
George: 2008 was definitely my greatest disappointment because everything went down regardless of quality or strategy. I am most proud of my long-term record at Royce.
e-fundresearch: In which market environment are we now in your opinion?
George: We are still in the recovery phase – because smaller companies went down so significantly last year, we would expect the next 3-5 years to be good period for equities of all sizes and especially smaller companies.
e-fundresearch: How do you act in this environment?
George: The same as we always do - by sticking to our discipline and continuing to focus on quality and risk management.
e-fundresearch: What are the challenges in this situation?
George: Volatility is still quite high and we remain in a recovery mode so investor confidence is still lacking.
e-fundresearch: What targets do you have over the short-term (until End of the year) and for the next 3-5 years?
George: We are not so sure what will happen through year end though I suspect that the US equity market will finish in positive territory. Over the next 3-5 years we expect equities to do quite well.
e-fundresearch: Which results would you value as very good, neutral and disappointing over the next three years?
George: If we do our job correctly we will probably be happy with our results in both an absolute and relative sense.
e-fundresearch: Do you have a model/ideal?
George: We believe that over longer-term periods smaller companies will outperform. By paying attention to risk, we will be able to reduce downside volatility and compound our up market results more consistently.
e-fundresearch: What is your motivation for your job?
George: I enjoy the business, enjoy analysing companies and enjoy competing at the highest level.
e-fundresearch: What do you like to achieve or better said, what are your next targets as a fund manager?
George: My targets/goals are always the same – to generate above-average results with below average risk.
e-fundresearch: Which occupation would your like to have if you wouldn’t be a fund manager?
George: I enjoy history, it holds so much of what we need to know for our lives today! so maybe something in that field.
e-fundresearch: Thank you for the interview!
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