David Nadel is succeeding at getting his Royce Funds [profile] into the Los Angeles Times.

The director of research and PM for the Legg Mason [profile] mutual fund affiliate says there are "really high-quality companies with very long operating histories, strong market shares in niche sectors and experience operating in a global way."

They're getting a lot of their growth from emerging markets. We like this mix of getting the developed-world management teams with first-world standards of corporate governance, but getting revenue sources largely from emerging markets.

Nadel said growth in Europe has slowed, but there are also real success stories in Germany and Switzerland, because these countries make products the world desires.

When Nadel was asked if dividends are his investment focus, he explained that they don't focus on companies with dividends, but rather companies with "high returns on invested capital and strong balance sheets." He believes these companies are more likely to weather hard economic times.

Finally, in regards to Royce's European smaller-companies fund and global value fund not performing as well in the past two years in comparison to 2009 and 2010, Royce says that they target higher-quality companies. He states, "Higher-quality companies don't always outperform. In shorter periods, they can underperform." 

Edited by: HFD


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