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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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Q4 2023 : 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 in the fourth quarter and for longer-term periods?

The Fund returned 13.55% for the quarter ended December 31, 2023, outperforming the Morningstar Mid-Cap Growth Category average return of 12.38%. For the 1-year period, the Fund returned 22.11%, outperforming the Morningstar category’s average return of 21.37%.

In addition, the Fund has outperformed over longer periods, and with lower risk. In fact, the Fund is the only mid-growth style fund among 114 unique Morningstar Mid-Cap Growth Category funds that has achieved top 5% performance for the 3, 5 and 10-year periods, along with Morningstar’s “Low” Risk Rating for the 3, 5 and 10-year periods, as of December 31, 2023.

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


Source: Morningstar as of 12/31/2023

Would you please describe the Fund’s risk/reward profile?

We believe that the Fund’s attractive risk/reward profile is primarily attributed to our investment approach. We own a concentrated portfolio of our “best ideas” in the mid-cap space, including those with a history of 10+ years of consistent growth in both stock price and earnings. As a result of our emphasis on consistent growth, the portfolio has experienced less volatility compared to our peers on average. In fact, the Fund’s Sharpe Ratio, a measure of risk-adjusted return, has outperformed the Morningstar Mid-Cap Growth Category average over the 3, 5 and 10-year periods as of December 31, 2023.


Source: Morningstar as of 12/31/2023

What are some examples of the types of companies your investment process favors?

When selecting companies for investment, we look for those with a long-term track record of consistent growth in stock price and earnings. We believe this type of history indicates that a company is well run and can operate successfully in a variety of market environments. Two examples of our portfolio holdings include the following:

  • Lennox International Inc. (LII) manufactures heating, air conditioning and refrigeration products. The company provides climate control systems for residential and commercial buildings through its distribution network.
  • CDW Corp. (CDW) provides information technology solutions to businesses, government entities, education and healthcare customers. The company provides a variety of products and services including hardware, software and cloud-based solutions.

What changes were made to the Fund in Q4?

In the fourth quarter, we added one company, Icon PLC (ICLR), to the portfolio. Icon provides clinical research services to pharmaceutical and biotechnology companies that are developing new drugs or medical devices.

We sold one stock, The Cooper Companies Inc. (COO), as it no longer met our stringent investment criteria. Cooper operates a contact lens business and provides reproductive care medical devices.

As of December 31, 2023, the Fund held 37 companies.


* 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 12/31/23, the Fund’s Top 10 Holdings were as follows: Gartner Inc (5.09%), CDW Corp (5.00%), MSCI Inc (4.66%), Lennox International Inc (4.55%), Tyler Technologies Inc (4.53%), Steris PLC (4.29%), Pool Corp (4.29%), TransDigm Group Inc (4.14%), Heico Corp (4.07%), Fair Isaac Corp (3.70%)

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 / 523 funds; 5 Year / 5 stars / 493 funds; 10 Year / 5 stars / 395 funds; ) VALLX (3 Year / 1 stars / 1115 funds; 5 Year / 1 stars / 1040 funds; 10 Year / 2 stars / 811 funds; ) VLEOX (3 Year / 5 stars / 559 funds; 5 Year / 5 stars / 527 funds; 10 Year / 5 stars / 405 funds; ) VALSX (3 Year / 5 stars / 1115 funds; 5 Year / 3 stars / 1040 funds; 10 Year / 3 stars / 811 funds; ) VLAAX (3 Year / 5 stars / 695 funds; 5 Year / 4 stars / 655 funds; 10 Year / 5 stars / 487 funds; ) VALIX (3 Year / 1 stars / 695 funds; 5 Year / 3 stars / 655 funds; 10 Year / 4 stars / 487 funds; ) VAGIX (3 Year / 2 stars / 426 funds; 5 Year / 2 stars / 386 funds; 10 Year / 2 stars / 275 funds; )

Source: Morningstar Direct