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

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There are plenty of choices in the Mutual Fund Equity Report category, but where should you start your research? Well, one fund that might be worth investigating is ProFunds Technology UltraSector Investor (TEPIX). TEPIX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

ProFunds is based in Columbus, OH, and is the manager of TEPIX. The ProFunds Technology UltraSector Investor made its debut in June of 2000 and TEPIX has managed to accumulate roughly $79.20 million in assets, as of the most recently available information. The fund is currently managed by Michael Neches who has been in charge of the fund since October of 2013.

Performance

Of course, investors look for strong performance in funds. TEPIX has a 5-year annualized total return of 26.13% 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 32.61%, 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 33.32% compared to the category average of 26.72%. Over the past 5 years, the standard deviation of the fund is 31.03% compared to the category average of 23.68%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.71, 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. TEPIX’s 5-year performance has produced a positive alpha of 5.2, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring 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 principally on equities that are traded in the United States.

The mutual fund currently has 97.13% of its holdings in stocks, which have an average market capitalization of $840.81 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Other

Turnover is 46%, which means, on average, the fund makes more trades in a given year than the category average.

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 1.43% compared to the category average of 1.29%. TEPIX is actually more expensive than its peers when you consider factors like cost.

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 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.

Your research on the Mutual Fund Equity Report segment doesn’t have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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