Value Line Small Cap Opportunities Fund
| Value Line Small Cap Opportunities Fund | |
|---|---|
| Investor Class | VLEOX |
| Institutional Class | VLEIX |
| AUM | $768M |
Stephen E. Grant Senior Portfolio Manager
* EULAV Asset Management (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 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:
Comfort Systems USA Inc (3.90%),
CACI International Inc Class A (3.17%),
Federal Signal Corp (3.14%),
AAON Inc (3.14%),
Ensign Group Inc (3.04%),
ExlService Holdings Inc (2.88%),
RLI Corp (2.85%),
SPS Commerce Inc (2.83%),
Post Holdings Inc (2.66%),
Exponent Inc (2.61%)
Morningstar™ Categories based on Investor class shares.
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 performance relative to the Morningstar Small Growth Category in the third quarter and for longer-term periods?
The Fund returned 10.14% for the three months ended September 30, 2024, outperforming the Morningstar Small Growth Category average return of 7.44%. For the 1-year period ended September 30, 2024, the Fund returned 32.05%, outperforming the Morningstar category’s average return of 25.69% by over 600 basis points.
In addition, the Fund has outperformed over longer periods, and with lower risk. In fact, the Fund is the only fund (among 159 unique Morningstar Small Growth category funds) that has achieved top quartile (25% or better) performance for the 1, 3, 5 and 10- year periods, along with Morningstar’s “Low” Risk Rating for the 3, 5 and 10-year periods as of September 30, 2024.
We believe the Fund’s relative outperformance over multiple periods is primarily due to our investment approach emphasizing high-quality companies with a long-term track record of consistent growth in both stock price and earnings.
Please visit the Fund’s performance page for complete performance information.
Source: Morningstar as of 9/30/24
Would you please elaborate on the Fund’s investment process and share an example or two?
The Fund’s investment approach emphasizes companies with a long-term history of consistent growth in both stock price and earnings. We look for companies that have performed well regardless of the market cycle or economic environment. Generally, the types of companies we favor have a strong market position as leaders in their niche areas. They often provide goods and services that experience steady demand in a variety of economic conditions.
For example, the Fund owns positions in two companies in the heating, ventilation and air conditioning (HVAC) industry that have performed well:
Given the portfolio emphasis on companies with a history of consistent growth, how does the Fund’s risk/reward profile compare to its Morningstar peers?
We believe that both long-term growth and risk mitigation are important. When selecting companies for investment in the Fund, we look for those with a long-term track record of consistent growth in stock price and earnings. As a result, the Fund has maintained an attractive risk/reward profile compared to its peers in the Morningstar Small Growth category.
The Fund’s Sharpe Ratio, a measure of risk-adjusted return, has outperformed the category average over the 3, 5 and 10-year periods ended September 30, 2024. The Fund has also earned Morningstar’s “Low” Risk Rating for the 3, 5 and 10-year periods ended September 30, 2024, and its standard deviation, a measure of volatility, has ranked among the lowest in the Morningstar category for the same periods.
Source: Morningstar as of 9/30/24