Royce Small-Cap Opportunity Fund among biggest tariff losers

The Royce Small-Cap Opportunity Fund, which — like all funds created by the firm of Wall Street legend Chuck Royce — specializes in small caps, has been one of the investment vehicles hit hardest by Trump’s tariffs, according to the rating agency Morningstar.

Rounding out the top three tariff victims are the ARK Innovation ETF, Cathie Wood’s flagship fund, and Fidelity Leveraged Company, which invests in junk bonds, reports Barron’s, citing Morningstar.

“Those owning small- and mid-cap stocks and companies with more speculative prospects or wobblier finances and business models fared the worst,” Barron’s quotes Morningstar senior principal Dan Culloton.

According to Morningstar, the ARK Innovation ETF lost 14% over the two days following the announcement of Trump’s “reciprocal” tariffs (April 3 and 4). The fund was dragged down by Tesla, owned by Elon Musk, and video game developer Roblox Corporation. Cathie Wood herself has voiced criticism of Trump’s tariffs.

The Royce Small-Cap Opportunity Fund tumbled 13% over the same period. While the fund is well diversified with 230 stocks in its portfolio, it invests in very small companies with low-priced shares. Such assets are often “under a cloud,” Culloton of Morningstar said, as quoted by Barron’s. He describes the fund’s approach as “feast or famine.”

Fidelity Leveraged Company also plunged 14% in the two days. According to its description, the fund invests mainly in common stock of leveraged companies and lower-quality debt securities, i.e., junk bonds. Culloton notes that while the fund has found some profitable ideas, its portfolio has always been volatile.