Royce translates its stock-picking skills to bargain-priced foreign companies. By Laura Cohn, Associate Editor June 1, 2010 The Royce Funds have a long and distinguished record of investing in small, undervalued U.S. companies. The firm's oldest fund, Pennsylvania Mutual, dates to 1962. But although Royce managers have been dabbling in foreign stocks for about a decade, they didn't start a fund dedicated to global markets until 2005. In 2007, the firm launched Royce Global Value (symbol RIVFX).Managers Whitney George and David Nadel like specialized firms with strong management teams and little debt. "Niche businesses have fewer competitors, more pricing power and higher profitability than other businesses," says Nadel. The fund's biggest position at last report was Major Drilling Group, a Canadian company that provides drilling services for miners worldwide. The firm is benefiting from growing demand for precious and industrial metals. Moreover, its ability to cut costs quickly and remain profitable during the recent recession impressed the Royce managers. George and Nadel also like Semperit, a 186-year-old Austrian company that makes specialized rubber products, such as escalator hand rails, and was early to move its production to low-cost Thailand. Global Value has just 15% of assets in U.S. stocks because the managers worry about the financial health of American consumers. Many of its U.S. holdings -- such as GrafTech International, which makes graphite electrodes, a key component in furnaces for producing steel -- derive a big portion of sales from exports.