If investors are looking at the Sector - Tech fund category, ProFunds Semicond UltraSector Inv SMPIX could be a potential option. SMPIX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Sector - Tech funds is an area filled with options, and SMPIX is one of them. Sector - Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.
History of Fund/Manager
SMPIX is a part of the ProFunds family of funds, a company based out of Columbus, OH. The ProFunds Semicond UltraSector Inv made its debut in June of 2000 and SMPIX has managed to accumulate roughly $176.97 million in assets, as of the most recently available information. The fund's current manager, Michael Neches, has been in charge of the fund since October of 2013.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 39.65%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 33.76% The fund's 3-year annualized total return of 33.76% places it in the top third, a metric that will likely stand out if you prefer to look at shorter time frames.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of SMPIX over the past three years is 28.69% compared to the category average of 12%. The fund's standard deviation over the past 5 years is 24.6% compared to the category average of 13.69%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In SMPIX's case, the fund lost 74.08% in the most recent bear market and underperformed comparable funds by 21.27%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 1.78, the fund is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a positive alpha of 11.43. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, SMPIX is a no load fund. It has an expense ratio of 1.46% compared to the category average of 1.41%. So, SMPIX is actually more expensive than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $15,000; each subsequent investment has no minimum amount.
Bottom Line
Overall, ProFunds Semicond UltraSector Inv SMPIX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, ProFunds Semicond UltraSector Inv SMPIX looks like a good potential choice for investors right now.
Don't stop here for your research on Sector - Tech funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare SMPIX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
View All Zacks #1 Ranked Mutual Funds
Original post