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How does your fund compare to the Larger Companies Focused Fund?
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* EULAV Asset Management (the “Adviser”) has contractually agreed to waive through June 30, 2020 certain Fund-wide fees and further assume certain Fund-wide expenses to the extent necessary to limit such expenses (excluding brokerage commissions, interest, taxes, and certain non-routine Fund-wide expenses) to 0.90% of the average daily net assets of each class (the “Fund-level Expense Limitation”). In addition, the Adviser and EULAV Securities LLC (the “Distributor”) have contractually agreed to permanently waive certain class-specific fees and assume certain class-specific expenses so that the Institutional Class bears its class-specific fees and expenses at the same percentage of its average daily net assets as the Investor Class’s class-specific fees and expenses (excluding 12b-1 fees and certain non-routine class-specific expenses) (the “Class Expense Limitation,” together with the Fund-level Expense Limitation, the “Expense Limitations”). Each Expense Limitation can be terminated with the agreement of the Fund’s Board. The Adviser and the Distributor may subsequently recover from a class any fees waived and expenses assumed within three years from the month in which the waiver or assumption occurred for such class, to the extent its expense ratio is less than the applicable Expense Limitation or, if lower, the expense limitation in effect when the waiver or assumption occurred. The Fund’s performance would be lower in the absence of such waivers.
As of 09/30/23, the Fund’s Top 10 Holdings were as follows:
Uber Technologies Inc (6.51%),
NVIDIA Corp (5.67%),
Meta Platforms Inc Class A (5.25%),
Alphabet Inc Class A (4.63%),
Amazon.com Inc (4.59%),
Exact Sciences Corp (3.91%),
Microsoft Corp (3.82%),
Salesforce Inc (3.62%),
Advanced Micro Devices Inc (3.45%),
Visa Inc Class A (3.43%)
There are risks associated with investing in small and mid cap stocks, which tend to be more volatile and less liquid than stocks of large companies, including the risk of price fluctuations.
The performance data quoted herein represents past performance and does not guarantee future results. Market volatility can dramatically impact the fund's short term performance. Current performance may be lower or higher than figures shown. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than their original cost. Past performance data through the most recent month end is available at vlfunds.com or by calling 800.243.2729.
You should carefully consider investment objectives, risks, charges and expenses of Value Line Funds before investing. This and other information can be found in the fund's prospectus and summary prospectus, which can be obtained free of charge from your investment representative, by calling 800.243.2729, or by clicking on the applicable fund at www.vlfunds.com. Please read it carefully before you invest or send money. Value Line Funds are distributed by EULAV Securities LLC. Past performance is no guarantee of future results.
Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell securities. Current and future portfolio holdings are subject to risk.
The average annual returns shown above are historical and reflect changes in share price, reinvested dividends and are net of expenses. Investment results and the principal value of an investment will vary.
The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three- year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
VLIFX (3 Year / 5 stars / 521 funds; 5 Year / 5 stars / 493 funds; 10 Year / 5 stars / 396 funds; )
VALLX (3 Year / 1 stars / 1126 funds; 5 Year / 1 stars / 1039 funds; 10 Year / 2 stars / 808 funds; )
VLEOX (3 Year / 5 stars / 560 funds; 5 Year / 5 stars / 526 funds; 10 Year / 5 stars / 395 funds; )
VALSX (3 Year / 4 stars / 1126 funds; 5 Year / 4 stars / 1039 funds; 10 Year / 3 stars / 808 funds; )
VLAAX (3 Year / 3 stars / 703 funds; 5 Year / 5 stars / 660 funds; 10 Year / 4 stars / 492 funds; )
VALIX (3 Year / 1 stars / 703 funds; 5 Year / 2 stars / 660 funds; 10 Year / 3 stars / 492 funds; )
VAGIX (3 Year / 3 stars / 423 funds; 5 Year / 2 stars / 383 funds; 10 Year / 2 stars / 278 funds; )
Source: Morningstar Direct
Q3 2023 : Portfolio Manager Q&A
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How did the Fund perform relative to the Morningstar Large Growth Funds category average in the third quarter and the 1-year period as of September 30, 2023?
In the third quarter ended September 30, 2023, the Fund returned -0.76%, surpassing the Morningstar Large Growth Funds category average decline of 3.59% by over 280 basis points. In a quarter when the major market indices were down, such as the S&P 500 Index which declined 3.27%, we are pleased the Fund outperformed on a relative basis. In addition, for the 1-year period, the Fund outperformed the category average by over 1,000 basis points, with a return of 33.78% compared to the category average of 23.46%.
Please visit the Fund’s performance page for complete performance information.
What drove the Fund’s performance compared to the S&P 500 Index in the third quarter?
The Fund’s performance in the third quarter was driven primarily by stock selection. From a sector perspective, the Fund’s largest contributors were Information Technology and Consumer Discretionary.
On the other hand, the Fund’s worst performing sector was Health Care. Within Health Care, the Fund’s worst performers included Exact Sciences Corp. (EXAS) which provides cancer screening and diagnostic products, and Revance Therapeutics Inc (RVNC), an innovative biotechnology company that offers neuromodulator therapies used for both aesthetic and therapeutic indications.
How is stock market volatility affecting your portfolio allocations among different types of growth stocks?
Our bottom-up investment process remains consistent regardless of the market or economic cycle. We seek to own a diversified yet focused portfolio of leading growth companies. Typically, we use stock market volatility as an opportunity to add to existing positions we feel are mispriced and trim from positions that we feel have less upside. During turbulent times in the market, we often add a new position to the Fund that we have been waiting to buy at an attractive entry point.
We feel that owning companies in varying stages of their growth life cycle is a great way to not only own the leading large-cap growth companies of today but also to own companies that have the potential to become the leading growth companies and performers of the future. We tend to segment the Fund’s holdings into 3 groups:
Established Growth Companies: This is the largest of the three segments. These are typically leading large-cap growth companies that exhibit sustainable growth, competitive operating advantages, dominant market share and benefit from secular growth drivers.
Next-Gen Growth Companies: This segment is composed of faster growing and earlier-staged companies.
Opportunistic Growth Companies: This segment is typically our smallest weighting in the Fund. In this area we may own some cyclical companies as well as out- of-favor growth companies that we feel the market has mispriced or misunderstood.
How do the Fund’s growth characteristics compare to the broader market?
We believe that sales and earnings growth drive share price appreciation over time. Our goal is to own a portfolio of companies that can collectively grow their future sales and earnings at faster rates relative to the broad market. As of September 30, 2023, the Fund’s portfolio had a 3-year projected average annual sales growth rate that was more than double that of the S&P 500 Index, and the Fund’s 3 to 5-year estimated forward earnings growth rate was also nearly double the growth rate of the S&P 500.