Royce Special Equity (RSEFX), a $2 billion fund, is up 20% this year. Charles Dreifus, its manager since 1998, has distinguished himself with a 12.7% annualized 10-year return, tying for the best return in the group featured in this article.
His portfolio appears to be in a defensive posture, given its 16% weighting to cash and no significant shifts in stock holdings in the third quarter.Specialty chemical maker Lubrizol (LZ) is the fund's largest stock holding, at 3.8%. It is up 52% this year. Consumer goods, at 31%, is the fund's largest sector weighting. That's led by National Presto Industries (NPK), at 3.5% of the fund. A maker of household goods and small kitchen appliances, including the Salad Shooter and the Pizzazz Pizza Maker, National Presto has sliced and diced its way to a 28% return this year. Perhaps representative of an expectation of an uptick in new building or in home improvements is the fund's 2.8% allocation to Hubbell (HUB.B). The company makes electrical components and products, as well as lighting for residential and commercial applications. It is up 32% this year, despite the dormant new housing- and commercial-construction markets.