Value Line Mid Cap Focused Fund
| Value Line Mid Cap Focused Fund | |
|---|---|
| Investor Class | VLIFX |
| Institutional Class | VLMIX |
| AUM | $1963M |
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 03/31/25, the Fund’s Top 10 Holdings were as follows:
Heico Corp (6.27%),
Tyler Technologies Inc (6.01%),
Waste Connections Inc (5.70%),
MSCI Inc (5.35%),
Lennox International Inc (4.64%),
Gartner Inc (4.28%),
Fair Isaac Corp (4.21%),
WR Berkley Corp (4.00%),
Casey's General Stores Inc (3.90%),
Monolithic Power Systems Inc (3.55%)
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 / 529 funds; 5 Year / 5 stars / 513 funds; 10 Year / 5 stars / 394 funds; )
VLIFX (3 Year / 4 stars / 479 funds; 5 Year / 5 stars / 446 funds; 10 Year / 5 stars / 363 funds; )
VALLX (3 Year / 4 stars / 1034 funds; 5 Year / 2 stars / 952 funds; 10 Year / 2 stars / 748 funds; )
VALSX (3 Year / 2 stars / 1034 funds; 5 Year / 3 stars / 952 funds; 10 Year / 3 stars / 748 funds; )
VLAAX (3 Year / 5 stars / 434 funds; 5 Year / 2 stars / 403 funds; 10 Year / 5 stars / 330 funds; )
VALIX (3 Year / 5 stars / 434 funds; 5 Year / 2 stars / 403 funds; 10 Year / 4 stars / 330 funds; )
VAGIX (3 Year / 2 stars / 424 funds; 5 Year / 2 stars / 379 funds; 10 Year / 2 stars / 281 funds; )
Source: Morningstar Direct
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, 2025, the Fund returned -0.73%, outperforming the Morningstar Mid-Cap Growth Category average return of -8.18%. We believe this considerable relative outperformance of over 700 basis points is primarily due to our investment approach, which emphasizes companies with 10+ years of consistent growth in both stock price and earnings. Given the operating predictability of these types of companies, they tend to outperform in a down market.
We are pleased that the Fund has also outperformed over longer-term periods while maintaining a lower-risk approach. Notably, the Fund is the only fund in the Morningstar category (among 106 unique funds) with performance that ranked in the top 15% or better while earning Morningstar’s “Low” Risk Rating for the 3, 5 and 10-year periods ended March 31, 2025.
Please visit the Fund’s performance page for complete performance information.
Would you please describe the Fund’s investment process and provide some examples?
The Fund is a concentrated portfolio of generally 25-50 companies that we view as our “best ideas” among mid-sized companies. Our stringent investment criteria emphasize mid-cap companies with a track record of consistent operating results. By investing in companies with 10 or more years of consistent growth in stock price and earnings, we believe the portfolio can benefit from companies that have demonstrated success throughout various economic and market conditions.
Often our portfolio companies operate outside of the spotlight, offering mundane yet essential goods and services. Two examples of long-term portfolio holdings include Waste Connections Inc. (WCN) and Heico Corp. (HEI). Waste Connections is the third-largest provider of solid waste services in North America to residential, commercial and industrial customers, including disposal and recycling services. Waste Connections was up over 13% in Q1 and its long-term returns are very impressive. Heico is the largest independent producer of replacement parts for commercial aircraft and provides niche components for the defense industry. Heico was up over 12% for the quarter and its long-term results are also quite impressive.
How does the Fund’s risk profile compare to other mid-cap growth funds?
We believe that risk management is just as important as growth potential when building a portfolio for long-term investment. When it comes to mid-cap companies, we invest in those with a history of success, demonstrated by 10+ years of consistent growth in both stock price and earnings. We believe that emphasizing companies with this type of consistency can lead to a “smoother ride” for investors.
Importantly, 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, 2025, out of over 100 funds.