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

If you've been stuck searching for Sector - Tech funds, consider ProFunds Semicond UltraSector Service Class (SMPSX) as a possibility. SMPSX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

Objective

SMPSX 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 based in Columbus, OH, and is the manager of SMPSX. Since ProFunds Semicond UltraSector Service Class made its debut in June of 2000, SMPSX has garnered more than $25.73 million in assets. The fund's current manager, Michael Neches, has been in charge of the fund since October of 2013.

Performance

Investors naturally seek funds with strong performance. SMPSX has a 5-year annualized total return of 52.53%, 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 87.63%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. Over the past three years, SMPSX's standard deviation comes in at 48.16%, compared to the category average of 20.41%. The fund's standard deviation over the past 5 years is 52.99% compared to the category average of 23.45%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 2.69, the fund 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. SMPSX's 5-year performance has produced a positive alpha of 29.6, 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 2.32% compared to the category average of 1.41%. From a cost perspective, SMPSX is actually more expensive than its peers.

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

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

For additional information on the Sector - Tech area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into SMPSX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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This article originally published on Zacks Investment Research (zacks.com).

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