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Is ProFunds Semicond UltraSector Service Class (SMPSX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Sector - Tech fund? ProFunds Semicond UltraSector Service Class (SMPSX) is a potential starting point. SMPSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

SMPSX is part of the Sector - Tech category, which boasts an array of different possible selections. With a much more diversified approach, Sector - Tech mutual funds give investors a way to own a stake in a notoriously risky sector. Tech companies are in various industries like semiconductors, software, internet, and networking, among others.

History of Fund/Manager

ProFunds is based in Columbus, OH, and is the manager of SMPSX. ProFunds Semicond UltraSector Service Class debuted in June of 2000. Since then, SMPSX has accumulated assets of about $2.19 million, according to the most recently available information. The fund's current manager, Michael Neches, has been in charge of the fund since October of 2013.

Performance

Investors naturally seek funds with strong performance. SMPSX has a 5-year annualized total return of 37.88% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 31.6%, 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. SMPSX's standard deviation over the past three years is 38.11% compared to the category average of 26.46%. The standard deviation of the fund over the past 5 years is 33.36% compared to the category average of 22.96%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.8, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. SMPSX has generated a positive alpha over the past five years of 11.84, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, SMPSX is a no load fund. It has an expense ratio of 2.65% compared to the category average of 1.38%. So, SMPSX 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 Service Class ( SMPSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a good potential choice for investors right now.

This could just be the start of your research on SMPSXin the Sector - Tech category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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