VY® American Century Sm-Mid Cp Val A IASAX

VY American Century Small-Mid Cap Value held 11.5% in regional banks as of February 2023. That was driven primarily by its small-cap sleeve, managed by Jeff John, which had 23.4% in regional banks. Both John's portfolio and Kevin Toney's mid-cap sleeve were well overweight regional banks going into the banking crisis in early March. Still, John said most of the regional banks he owned don’t cater to venture capital companies and wealthy clients with deposits over the insured limits. He believes there's less pressure on the banks his fund owns to raise deposit rates to keep clients from leaving for other options and notes the market wasn't appreciating the Fed's backstop. While he remained comfortable with the small-cap sleeve’s regional bank exposure, he had taken a measured approach to adding to banks during the turmoil, focusing on those with the best balance sheets and deposit structures. Toney wasn't available for comment. Meanwhile, the overweighting did not hurt the performance of the fund: Avoiding most of the worst-hit banking stocks helped the fund's A shares outperform the benchmark in 2023 through March 16 by more than 1 percentage point. The fund's Morningstar Analyst Rating of Bronze is unchanged.