Mutual Fund Spotlight: Value Line Small Cap Opportunities [VLEOX]
By: Ted Black, CFP©
Summer 2020 (Vol. 38, No. 2)
As its name indicates, the Value Line Small Cap Opportunities Fund (VLEOX – Investor Class) is a no-load mutual fund that invests in U.S. based companies that are categorized as “Small Cap”.
What’s Cap? Cap is short for market capitalization. A publicly traded company’s market capitalization is arrived upon by multiplying all of the shares of stock outstanding by the current price of the stock. It’s generally accepted that the small cap universe includes companies that have market capitalizations between $300 million and $2 billion. Clearly, these are not mom and pop shops, but far smaller than behemoths such as Apple or Amazon, each boasting market capitalizations in excess of $1.5 trillion!
Since 1998, this fund is managed by Stephen Grant. Mr. Grant earned his BA from Stanford, his MBA from Wharton, and has over 25 years of investment experience. Here’s a brief summary of some of his recent remarks about managing the fund during this pandemic:
- The rapid sell-off of small cap companies has enabled us to readjust the weightings of our existing portfolio and add selected high-quality, growth-oriented companies at current prices;
- We seek companies that have a demonstrated history of 10+ years of growth in earnings and stock price; as a result, the Fund typically does not invest in biotechnology or energy companies;
- We continue to favor companies that have time-tested business models and have grown regardless the economic environment rather than “high-flying, headline-grabbing” smaller companies.
By and large, small cap stocks and funds have struggled this year when compared to their large cap brothers. The S&P 500® Index, which is the go-to barometer for the performance of U.S. based large cap companies, has significantly outperformed the Russell 2000®, a popular barometer for U.S. based small cap companies. However, this fund has been a bit of a bright spot in the small cap world so far in 2020. As of 7/31/2020, this fund has a total return of 2.39%, while its most relevant benchmark, the Russell 2000®, is down 10.57%.
Investors have long recognized the advantages of building a diversified portfolio. Depending upon one’s personal situation, a high quality small cap fund may make for a solid addition to a portfolio built for long term success.
If you’re interested in this fund, or would like a portfolio review to determine if this fund might be an appropriate addition to your portfolio, please call Ted Black, CFP® at 888-878-0001, extension 3.
Performance annualized and updated through 07/31/2020: 1-Year: +4.05%; 3-Year: +9.81%; 5-Year: +9.68%. The gross annual expense ratio is 1.19%.
Statistics and information provided by Morningstar and Value Line Funds. Please visit the Value Line Funds website at https://vlfunds.com for the most recent performance information. The principal value and investment return will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns shown, unless otherwise indicated, are total returns, including any capital gains or losses and all dividend and capital gains distributions. The performance data quoted represents past performance and in no way guarantees future results. Mutual funds are not FDIC insured.
Mutual funds are sold by prospectus. An investor should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. Please contact our office at 888-878-0001 to obtain a prospectus. Please read the prospectus carefully before you invest or send money.
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.