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Is ProFunds Semicond UltraSector Investor (SMPIX) a Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Sector - Tech category, but where should you start your research? Well, one fund that may not be worth investigating is ProFunds Semicond UltraSector Investor (SMPIX). SMPIX possesses a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that SMPIX 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 SMPIX. ProFunds Semicond UltraSector Investor debuted in June of 2000. Since then, SMPIX has accumulated assets of about $29.66 million, according to 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

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 28.79%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 42.65%, 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. Over the past three years, SMPIX's standard deviation comes in at 27.61%, compared to the category average of 12.39%. The fund's standard deviation over the past 5 years is 28.6% compared to the category average of 12.75%. 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 the most recent bear market, SMPIX lost 74.08% and underperformed its peer group by 20.75%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. SMPIX has a 5-year beta of 1.8, which means it 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. Over the past 5 years, the fund has a positive alpha of 9.57. This means that managers in this portfolio are skilled in picking 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, SMPIX is a no load fund. It has an expense ratio of 1.50% compared to the category average of 1.31%. Looking at the fund from a cost perspective, SMPIX is actually more expensive than its peers.

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 Semicond UltraSector Investor ( SMPIX ) has a low Zacks Mutual Fund rank, strong performance, worse downside risk, and higher fees compared to its peers.

For additional information on this product, or to compare it to other mutual funds in the Sector - Tech, make sure to go to www.zacks.com/funds/mutual-funds 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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