Is ProFunds UltraSmall-Cap Inv (UAPIX) A Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is ProFunds UltraSmall-Cap Investor UAPIX. UAPIX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

UAPIX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.

History of Fund/Manager

UAPIX is a part of the ProFunds family of funds, a company based out of Columbus, OH. Since ProFunds UltraSmall-Cap Investor made its debut in February of 2000, UAPIX has garnered more than $90.05 million in assets. The fund is currently managed by Rachel Ames who has been in charge of the fund since October of 2013.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 25.05%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 15.16%, which places it in the top third during this time-frame.

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 UAPIX over the past three years is 28.54% compared to the category average of 13.91%. The fund's standard deviation over the past 5 years is 28.18% compared to the category average of 13.31%. 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. UAPIX lost 82.86% in the most recent bear market and underperformed its peer group by 30.42%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 2.36, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a negative alpha of -7.52. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, UAPIX is a no load fund. It has an expense ratio of 1.50% compared to the category average of 1.15%. So, UAPIX is actually more expensive than its peers from a cost perspective.

This fund requires a minimum initial investment of $15,000, while there is no minimum for each subsequent investment.

Bottom Line

Overall, ProFunds UltraSmall-Cap Investor UAPIX has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, ProFunds UltraSmall-Cap Investor UAPIX looks like a good potential choice for investors right now.

Don't stop here for your research on Small Cap Blend 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 UAPIX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.