Technology

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

On the lookout for a Sector - Tech fund? Starting with ProFunds Semicond UltraSector Service Class (SMPSX) is one possibility. SMPSX possesses 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 SMPSX 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 SMPSX. ProFunds Semicond UltraSector Service Class made its debut in June of 2000, and since then, SMPSX has accumulated about $2.83 million in assets, per the most up-to-date date available. Michael Neches is the fund's current manager and has held that role since October of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 27.48%, 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 27.7%, 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 24.23%, the standard deviation of SMPSX over the past three years is 36.12%. Over the past 5 years, the standard deviation of the fund is 32.48% compared to the category average of 22.27%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.74, so it is likely going to be more volatile than the market at large. 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's 5-year performance has produced a positive alpha of 11.41, which means 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, SMPSX is a no load fund. It has an expense ratio of 2.56% compared to the category average of 1.38%. From a cost perspective, SMPSX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $15,000 and that 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.

Want even more information about SMPSX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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