A Value Line Fund Breaks With Tradition

Fund Watch

A Value Line Fund Breaks With Tradition

The manager of Value Line Mid Cap Focused goes for companies with rising profits and climbing share prices.


The firm behind the venerable Value Line Investment Survey (VLIFX) opened its first mutual fund in 1950. For years, the managers of Value Line Fund assembled the portfolio by relying heavily on the Survey’s ranking system, which assigns stocks a short-term “time­liness” score of 1 (the top rating) to 5. But when Stephen Grant became manager in 2009, he took a different tack. He says that although he might take a look at a stock because of a good rating, the rankings don’t figure heavily into the fund’s overall strategy.

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The fund, renamed Value Line Mid Cap Focused in 2015, invests in stocks with market values of $2 billion to $18 billion. Grant prefers companies with steadily rising profits and a consistently ascending share price over at least 10 years. He favors companies with unique products or services and avoids those that are too closely tied to the ups and downs of the economy.

Few stocks meet Grant’s criteria. Airlines and metals firms are too cyclical, and Grant’s aversion to sectors in which it’s hard for businesses to stand out generally rules out utilities and energy stocks. Many of the fund’s 45 stock holdings are, frankly, boring. For example, Fiserv, its biggest holding, makes software for financial-services firms. Grant says his tame portfolio should perform relatively well in difficult markets. True enough: Two of the fund’s best years, on a relative basis, were 2011 and 2015, which were so-so years for the stock market.

@Rankings exclude share classes of this fund with different fee structures or higher minimum initial investments. r Maximum redemption fee. Sources: Morningstar Inc., Vanguard.