Is ProFunds Technology UltraSector Investor (TEPIX) a Strong Mutual Fund Pick Right Now?

·4-min read

Sector - Tech fund seekers should consider taking a look at ProFunds Technology UltraSector Investor (TEPIX). TEPIX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that TEPIX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.

History of Fund/Manager

ProFunds is based in Columbus, OH, and is the manager of TEPIX. Since ProFunds Technology UltraSector Investor made its debut in June of 2000, TEPIX has garnered more than $62.68 million in assets. 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 40.38%, and is 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 37.39%, 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. Compared to the category average of 26.46%, the standard deviation of TEPIX over the past three years is 32.56%. Over the past 5 years, the standard deviation of the fund is 27.39% compared to the category average of 22.27%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.62, so investors should note that 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. The fund has produced a positive alpha over the past 5 years of 11.68, which shows that managers in this portfolio are skilled in picking 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, TEPIX is a no load fund. It has an expense ratio of 1.61% compared to the category average of 1.35%. Looking at the fund from a cost perspective, TEPIX is actually more expensive than its peers.

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

Bottom Line

Overall, ProFunds Technology UltraSector Investor ( TEPIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, ProFunds Technology UltraSector Investor ( TEPIX ) 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 TEPIX to its peers 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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