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

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If investors are looking at the Sector - Tech fund category, ProFunds Technology UltraSector Investor (TEPIX) could be a potential option. 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

TEPIX 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 responsible for TEPIX, and the company is based out of Columbus, OH. Since ProFunds Technology UltraSector Investor made its debut in June of 2000, TEPIX has garnered more than $96.68 million in assets. The fund is currently managed by Michael Neches who has been in charge of the fund since October of 2013.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 22.38%, 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 23.75%, 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. TEPIX's standard deviation over the past three years is 22.39% compared to the category average of 15.45%. The fund's standard deviation over the past 5 years is 21.51% compared to the category average of 15.37%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In TEPIX's case, the fund lost 68.74% in the most recent bear market and underperformed its peer group by 15.43%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. TEPIX has a 5-year beta of 1.77, which means it 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. With a positive alpha of 3.55, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.

This fund is currently holding about 93.71% stock in stocks, with an average market capitalization of $471.38 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other

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, TEPIX is a no load fund. It has an expense ratio of 1.49% compared to the category average of 1.35%. TEPIX is actually more expensive than its peers when you consider factors like cost.

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 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, this fund 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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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