RPT-FUND VIEW-Royce likes precious metals; shy of financials

(Repeats story first published on Wednesday)

* Likes Canadian miners

* Underweight Financials but likes asset managers

* Says important to keep some exposure to precious metals

By Sweta Singh and Vikram Subhedar

BANGALORE, Feb 18 (Reuters) - Royce & Associates LLC, an investment manager which focuses solely on small companies, said it is getting more aggressive in its stock selection and suggested staying invested even as risk-averse investors flee equities.

The firm, founded by Charles Royce in 1972, likes to buy companies with strong balance sheets based on absolute valuations when they are out of favor - a discipline baptized in the bear market of 1973-74, fund manager Whitney George told Reuters.

"We like to buy stocks when they are on sale and certainly we have had one heck of a yard sale here in the last six months," George, who helps manage about $7 billion in assets at Royce, said.

Over 28 years of investment management experience -- with 17 of those at Royce -- provides George with a little more confidence than someone who is coping with his first bear market.

"The more of these you live through, the more recoveries you see, the higher confidence you have that there is a dawn after night," George, a survivor of the 1987 crash in which lost his job, said.

To be sure, the latest meltdown has taken its toll on the funds George runs.

His $885 million Royce Value Fund RYVFX.O was down 6.43 percent in January after falling almost 35 percent in 2008.

The Royce Low-Priced Stock Fund, which had about $2.5 billion is assets as of Dec. 31, 2008, and invests primarily in small- and mid-cap companies whose shares are below $25 each, is down about 7 percent year-to-date.

These funds have tracked the fall in the Russell 2000 .RUT index of small-cap stocks over those time periods but have outperformed the index on a 10-year time horizon.

BRIGHT SPOTS

Small Canadian gold and silver miners have been recent outperformers for Royce.