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A Strong Performing, Lower Risk, Focused Mid-Cap Solution

Mid-cap stocks are often called the “sweet spot of investing”. With the Value Line Mid Cap Focused Fund, the “sweet spot” just got a little sweeter.

3 Reasons to Consider the Value Line Mid Cap Focused Fund


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Q1 2024 : Portfolio Manager Q&A

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Would you please comment on the Fund’s performance relative to the Morningstar Mid-Cap Growth Category average in the first quarter?

For the quarter ended March 31, 2024, the Fund returned 7.63%, underperforming the Morningstar Mid-Cap Growth Category average of 9.42%. While we are never satisfied with relative underperformance, we believe that longer-term periods are more important to investors. Importantly, the Fund’s performance ranked in the top 1% for the 3-year period, and top 6% and 3% in its category for the 5 and 10-year periods, respectively, ended March 31, 2024.

We believe this relative outperformance over long-term periods is primarily due to our investment approach of owning companies with a 10+ year track record of consistent growth in both stock price and earnings. In fact, the Fund is the only mid-growth style fund in the Morningstar Mid-Cap Growth Funds category (among 116 unique funds) that has a “Low” Risk Rating for the 3, 5 and 10-year periods as of March 31, 2024, and top 10% or better performance for the same periods.

Please visit the Fund’s performance page for complete performance information.


Source: Morningstar as of 3/31/24

Would you please expand on the Fund’s approach to risk-management?

In our view, growth potential and risk management are both important considerations when investing in mid-cap companies. Typically, mid-sized companies have more established business operations and experienced management compared to smaller companies. Meanwhile, compared to larger companies, mid-cap companies have the potential for longer growth runways as they generally have room to expand their market share.

Amid this mid-cap landscape, we invest in companies with a history of success, with 10 or more years of consistent growth in both stock price and earnings. We believe that companies with such consistent, long-term growth have shown stability through various economic conditions, which bodes well from a growth and volatility perspective for investors.

In fact, the Fund has an outstanding low risk profile as measured by standard deviation. Among its peers in the Morningstar Mid-Cap Growth Category, the Fund’s standard deviation ranks as the #1 lowest for the 3, 5 and 10-year periods ended March 31, 2024.


Source: Morningstar as of 3/31/24

Would you please provide some examples of the types of companies owned in the Fund?

The Fund is a concentrated portfolio of our “best ideas” among mid-cap companies that meet our stringent investment criteria, including consistent operating results through various economic cycles. The Fund generally owns between 25 and 50 companies and held 37 companies as of March 31, 2024.

One portfolio example is CDW Corp. (CDW) which provides information technology solutions to business, government, education and healthcare customers. The company’s products include such essential items as computer monitors, electronics, networking equipment, as well as software for communication, graphics, and other applications. The company has customers in the U.S., Canada and the United Kingdom.

Another Fund holding example is TransDigm Group Inc. (TDG), which the Fund has owned since 2015. TransDigm designs and produces aircraft components and systems that are widely used in commercial and military aircraft.


* 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 03/31/24, the Fund’s Top 10 Holdings were as follows: CDW Corp (5.35%), MSCI Inc (5.32%), Gartner Inc (4.84%), Tyler Technologies Inc (4.55%), Lennox International Inc (4.42%), Heico Corp (4.39%), TransDigm Group Inc (4.12%), Pool Corp (4.02%), WR Berkley Corp (3.83%), Monolithic Power Systems Inc (3.74%)

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 / 510 funds; 5 Year / 5 stars / 476 funds; 10 Year / 5 stars / 382 funds; ) VALLX (3 Year / 1 stars / 1100 funds; 5 Year / 1 stars / 1026 funds; 10 Year / 2 stars / 798 funds; ) VLEOX (3 Year / 5 stars / 552 funds; 5 Year / 5 stars / 523 funds; 10 Year / 5 stars / 399 funds; ) VALSX (3 Year / 4 stars / 1100 funds; 5 Year / 2 stars / 1026 funds; 10 Year / 3 stars / 798 funds; ) VLAAX (3 Year / 4 stars / 680 funds; 5 Year / 3 stars / 642 funds; 10 Year / 5 stars / 485 funds; ) VALIX (3 Year / 1 stars / 680 funds; 5 Year / 3 stars / 642 funds; 10 Year / 4 stars / 485 funds; ) VAGIX (3 Year / 2 stars / 426 funds; 5 Year / 2 stars / 382 funds; 10 Year / 2 stars / 270 funds; )

Source: Morningstar Direct