Value Line Small Cap Opportunities Fund
| Value Line Small Cap Opportunities Fund | |
|---|---|
| Investor Class | VLEOX |
| Institutional Class | VLEIX |
| AUM | $816M |
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 03/31/26, the Fund’s Top 10 Holdings were as follows:
RBC Bearings Inc (5.49%),
Woodward Inc (5.23%),
CACI International Inc Class A (4.90%),
Watts Water Technologies Inc Class A (4.81%),
Ensign Group Inc (4.74%),
Applied Industrial Technologies Inc (4.53%),
SPX Technologies Inc (3.75%),
Federal Signal Corp (3.64%),
Rush Enterprises Inc Class A (3.17%),
GATX Corp (3.01%)
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 / 4 stars / 522 funds; 5 Year / 5 stars / 500 funds; 10 Year / 4 stars / 399 funds; )
VLIFX (3 Year / 2 stars / 469 funds; 5 Year / 5 stars / 448 funds; 10 Year / 5 stars / 374 funds; )
VALLX (3 Year / 3 stars / 998 funds; 5 Year / 2 stars / 937 funds; 10 Year / 2 stars / 763 funds; )
VALSX (3 Year / 1 stars / 998 funds; 5 Year / 2 stars / 937 funds; 10 Year / 2 stars / 763 funds; )
VLAAX (3 Year / 1 stars / 465 funds; 5 Year / 1 stars / 445 funds; 10 Year / 2 stars / 371 funds; )
VALIX (3 Year / 5 stars / 465 funds; 5 Year / 1 stars / 445 funds; 10 Year / 4 stars / 371 funds; )
Source: Morningstar Direct
Would you please discuss your perspective on the market environment and the Fund’s performance in the fourth quarter?
The first quarter of 2026 marked a shift in market dynamics following the narrow, mega-cap driven leadership that characterized much of 2025. The U.S. equity market experienced elevated volatility in response to geopolitical concerns due to the Middle East conflict and macro uncertainty related to inflation.
Against this backdrop, the Fund generated a return of 1.15% for the three months ended March 31, 2026, outperforming the Morningstar Small Growth Category average of -2.07%. The Fund also outperformed the category over the 3, 5 and 10-year periods as of March 31, 2026.
While shorter-term results can vary depending on market leadership, the Fund remains focused on identifying companies with long-term, consistent growth in both stock price and earnings. We believe this approach positions the Fund well to deliver attractive long-term results.
Please visit the Fund’s performance page for complete performance information.
What were the primary contributors and detractors to the Fund’s performance during the quarter?
The Fund’s relative outperformance during the quarter was driven primarily by stock selection in the Industrials sector. Two of the largest positive contributors in the sector were Comfort Systems (FIX), which provides heating, ventilation and cooling services, and RBC Bearings (RBC), which manufactures parts for the industrial, defense and aerospace industries.
The Fund also benefited from its underweight positioning in Information Technology and Health Care, which together represent a significant portion of its benchmark, the Russell 2000 Index. Both sectors declined during the quarter, and the Fund’s lower exposure helped limit the downside impact.
On the negative side, performance was affected by the Fund’s lack of exposure to the energy sector, which was the strongest-performing area during the period.
Were there any notable portfolio changes during the quarter?
During the quarter, we increased the portfolio’s exposure to several current holdings, including Rush Enterprises Inc. (RUSHA), Primerica Inc. (PRI), Applied Industrial Technologies Inc. (AIT), GATX Corp. (GATX), and SPX Technologies Inc. (SPXC), along with smaller additions to Ensign Group Inc. (ENSG) and Enpro Inc. (NPO).
At the same time, the Fund exited nine positions, including J&J Snack Foods Corp. (JJSF), Chemed Corp. (CHE), Walker and Dunlop Inc. (WD), and Trinet Group Inc. (TNET), reflecting ongoing efforts to refine the portfolio and reallocate capital toward higher-conviction ideas. As of March 31, 2026, the Fund held 50 positions.
How do you manage risk in the current environment, and how has this influenced the Fund’s long-term profile?
Risk management remains a core element of the Fund’s investment process, particularly in an environment where certain areas of the market have exhibited elevated volatility. The Fund emphasizes companies with stable operating performance, earnings, and durable business models, while actively managing position sizes to capture pricing opportunities and limit downside exposure. Rather than reacting to short-term market movements, our focus remains on businesses that can perform consistently across different environments.
Over time, this disciplined approach has resulted in lower volatility relative to peers, as measured by standard deviation. The Fund ranks among the lowest in the Morningstar Small Growth Category for the 3, 5, and 10-year periods ended March 31, 2026.
Source: Morningstar as of 3/31/26