Value Line Mid Cap Focused Fund
| Value Line Mid Cap Focused Fund | |
|---|---|
| Investor Class | VLIFX |
| Institutional Class | VLMIX |
| AUM | $1994M |
Stephen E. Grant Senior Portfolio Manager
* The Adviser and EULAV Securities LLC, the Fund’s principal underwriter (the “Distributor”), have agreed to waive certain class-specific fees and/or pay certain class-specific expenses incurred by the Institutional Class 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 any extraordinary expenses incurred in different amounts by the classes) (the “Expense Limitation”). The information regarding the Institutional Class in the table has been restated to reflect the Expense Limitation. The Adviser and the Distributor may subsequently recover from assets attributable to the Institutional Class the reimbursed expenses and/or waived fees (within 3 years after the fiscal year end in which the waiver/reimbursement occurred) to the extent that the Institutional Class’s expense ratio is less than the Expense Limitation or, if lower, the expense limitation in effect when the waiver/reimbursement occurred. The Expense Limitation can be terminated or modified before June 30, 2019 only with the agreement of the Fund’s board. The Fund's performance would be lower in the absence of such waivers.
As of 09/30/24, the Fund’s Top 10 Holdings were as follows:
Tyler Technologies Inc (5.40%),
Heico Corp (5.29%),
Monolithic Power Systems Inc (5.25%),
MSCI Inc (5.02%),
Waste Connections Inc (5.01%),
Fair Isaac Corp (4.49%),
Lennox International Inc (4.39%),
CDW Corp (4.29%),
Gartner Inc (4.14%),
IQVIA Holdings Inc (3.84%)
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 1-800-243-2729.
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.
VLEOX (3 Year / 5 stars / 536 funds; 5 Year / 5 stars / 517 funds; 10 Year / 4 stars / 395 funds; )
VLIFX (3 Year / 5 stars / 477 funds; 5 Year / 5 stars / 440 funds; 10 Year / 5 stars / 356 funds; )
VALLX (3 Year / 2 stars / 1020 funds; 5 Year / 2 stars / 955 funds; 10 Year / 2 stars / 751 funds; )
VALSX (3 Year / 4 stars / 1020 funds; 5 Year / 2 stars / 955 funds; 10 Year / 3 stars / 751 funds; )
VLAAX (3 Year / 4 stars / 677 funds; 5 Year / 4 stars / 636 funds; 10 Year / 5 stars / 484 funds; )
VALIX (3 Year / 2 stars / 677 funds; 5 Year / 4 stars / 636 funds; 10 Year / 4 stars / 484 funds; )
VAGIX (3 Year / 2 stars / 431 funds; 5 Year / 1 stars / 386 funds; 10 Year / 2 stars / 271 funds; )
Source: Morningstar Direct
Would you please comment on the Fund’s outperformance relative to the Morningstar Mid-Cap Growth Funds Category average in the third quarter as well as longer-term periods?
The Fund returned 9.93% for the quarter ended September 30, 2024, outperforming the Morningstar Mid-Cap Growth Category average return of 6.46%. For the 1-year period, the Fund returned 30.95%, outperforming the Morningstar category’s average return of 26.45% by 450 basis points.
When considering longer time periods, we are pleased the Fund is one of only two funds in the Morningstar category that achieved top 25% or better performance for the 1, 3, 5 and 10-year periods and Morningstar’s “Low” Risk Rating for the 3, 5 and 10-year periods as of September 30, 2024.
Please visit the Fund’s performance page for complete performance information.
Source: Morningstar as of 9/30/24
Would you please describe the Fund’s approach to seeking performance while managing risk?
We believe the Fund’s attractive risk/reward relationship is largely due to our investment process of owning companies that have 10 or more years of consistent growth in both stock price and earnings. In our view, this emphasis on steady growth has minimized the Fund’s volatility compared to our peers.
In fact, the Fund’s standard deviation, a measure of volatility, ranks the lowest among its peers in the Morningstar Mid-Cap Growth Category for the 3, 5 and 10-year periods ended September 30, 2024.
Source: Morningstar as of 9/30/24
Would you please share some examples of the companies that illustrate the Fund’s long-term, lower-risk investment approach?
The Fund’s investment process emphasizes companies that have well-run, more predictable business operations and have successfully operated in a variety of market conditions. Companies that have a track record of consistent growth throughout market cycles typically have a dominant market position in their niche area, often providing mundane yet essential products and services. Two portfolio examples include the following companies:
What changes were made to the portfolio in Q3?
During the third quarter, we added three companies to the portfolio: Comfort Systems USA Inc. (FIX), which provides heating, ventilation and air conditioning services; Brown & Brown Inc. (BRO), an insurance agent and broker; and Republic Services Inc. (RSG), the second-largest provider of solid waste services in the U.S.
As of September 30, 2024, the Fund owned 41 companies.