Royce Global Trust (RGT): A Compelling Undervalued Opportunity in Global Small-Cap Equities

Royce Global Trust (RGT) has long been a focal point for investors seeking exposure to undervalued global small-cap equities through the lens of closed-end fund (CEF) discount trading. As of August 29, 2025, RGT trades at a -14.13% discount to its net asset value (NAV), with a share price of $12.74 versus a NAV of $14.83 [2]. This discount, while steep, is not an anomaly. Over the past three years, the fund has averaged a -14.51% discount, and the 52-week average stands at -14.23% [2]. Such persistent undervaluation suggests market inefficiencies that value investors may exploit.

A Value-Driven Portfolio with Global Diversification

RGT’s investment strategy aligns closely with value principles. The fund focuses on small-cap and mid-cap equities across global markets, prioritizing companies with strong returns on invested capital and long-term reinvestment potential [1]. As of July 31, 2025, its portfolio is concentrated in financials (29.5%) and industrials (28.3%), with a weighted average P/E ratio of 25.8x and a P/B ratio of 3.0x [2]. These metrics indicate a preference for companies trading at reasonable valuations relative to earnings and book value, a hallmark of value investing.

The fund’s geographic diversification further enhances its appeal. At least 65% of assets are allocated to non-U.S. companies spread across three or more countries [3]. This global exposure mitigates regional risks while tapping into growth opportunities in emerging and developed markets. For instance, the top holding, Tel Aviv Stock Exchange, accounts for 3.9% of net assets [2], underscoring RGT’s willingness to capitalize on niche markets.

Discount Trading and Expense Efficiency

The discount to NAV presents a unique opportunity. When a CEF trades at a discount, investors can acquire assets worth $14.83 for just $12.74, effectively purchasing a diversified portfolio of global small-cap equities at a 14% markdown. This discount is amplified by RGT’s 1.71% expense ratio, which includes a 1.00% management fee and 0.40% in other expenses [2]. While not the lowest in its category, the ratio is reasonable given the fund’s active management and global focus.

Historically, RGT’s discount has fluctuated within a narrow range. The 52-week low of -17.10% [2] suggests the market has occasionally overcorrected, creating even more compelling entry points. For value investors, the key is to assess whether the discount reflects temporary market sentiment or a fundamental mispricing of the fund’s holdings. Given RGT’s 10-year average annual total return of 8.49% [2], the latter appears unlikely.

Performance and Long-Term Potential

RGT’s performance underscores its resilience. Year-to-date through July 31, 2025, the fund delivered 12.67% returns at NAV and 12.99% at the market price [2]. Over three years, it has returned 11.50% annually [2], outperforming many peers in the global small-cap space. These results, combined with a 16% portfolio turnover rate [2], indicate a disciplined approach to capital allocation and risk management.

The fund’s strategy of targeting companies with durable competitive advantages and strong reinvestment potential [1] positions it well for long-term growth. As global markets continue to undervalue small-cap equities—particularly outside the U.S.—RGT’s discount may persist, offering patient investors a margin of safety.

Conclusion: A Strategic Buy for Value Investors

Royce Global Trust (RGT) embodies the intersection of value investing and CEF discount trading. Its substantial and consistent NAV discount, coupled with a globally diversified portfolio of undervalued small-cap equities, creates a compelling case for investors seeking long-term capital appreciation. While the discount may fluctuate, the fund’s disciplined approach, experienced management, and historical performance suggest that the market’s undervaluation of RGT is likely temporary. For those willing to look beyond short-term volatility, RGT represents a strategic opportunity to access high-quality global equities at a significant discount.

Source:
[1] Royce Global Trust, Inc. [https://www.royceinvest.com/funds/royce-global-trust/]
[2] RGT Royce Global Trust, Inc., closed-end fund summary [https://www.cefconnect.com/fund/RGT]
[3] Royce Global Trust (NYSE: RGT) as of Jul 31, 2025 [https://www.prnewswire.com/news-releases/royce-global-trust-nyse-rgt-as-of-jul-31-2025-302544187.html]