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Is ProFunds Biotech Ultra Sector Investor (BIPIX) a Strong Mutual Fund Pick Right Now?

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Sector - Health fund seekers may want to consider taking a look at ProFunds Biotech Ultra Sector Investor BIPIX . BIPIX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that BIPIX is a Sector - Health fund, and this area is also loaded with various options. Sector - Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

ProFunds is based in Columbus, OH, and is the manager of BIPIX. Since ProFunds Biotech Ultra Sector Investor made its debut in June of 2000, BIPIX has garnered more than $320.94 million in assets. 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. BIPIX has a 5-year annualized total return of 27.72% and it sits 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 4.31%, 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 13.08%, the standard deviation of BIPIX over the past three years is 31.42%. The standard deviation of the fund over the past 5 years is 30.7% compared to the category average of 12.39%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, BIPIX lost 28.69% and outperformed its peer group by 4.18%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Nevertheless, with a 5-year beta of 2.06, the fund is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. BIPIX has generated a negative alpha over the past five years of -1.65, demonstrating that managers in this portfolio find it difficult to pick 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, BIPIX is a no load fund. It has an expense ratio of 1.45% compared to the category average of 1.07%. BIPIX is actually more expensive than its peers when you consider factors like cost.

While the minimum initial investment for the product is $15,000, investors should also note that there is no minimum for each subsequent investment.

Bottom Line

Overall, ProFunds Biotech Ultra Sector Investor has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on BIPIX in the Sector - Health 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. 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.

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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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