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

If you have been looking for Sector - Health fund category, a potential starting could be 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

The world of Sector - Health funds is an area filled with options, such as BIPIX. Healthcare is one of the biggest sectors of the American economy, and Sector - Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

BIPIX finds itself in the ProFunds family, based out of Columbus, OH. Since ProFunds Biotech Ultra Sector Investor made its debut in June of 2000, BIPIX has garnered more than $320.94 million in assets. 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. BIPIX has a 5-year annualized total return of 24.7% and it sits 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 0.78%, 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, BIPIX's standard deviation comes in at 31.67%, compared to the category average of 13.12%. Over the past 5 years, the standard deviation of the fund is 30.95% compared to the category average of 12.6%. 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 BIPIX's case, the fund lost 28.69% in the most recent bear market and outperformed its peer group by 4.18%. This could mean that the fund is a better choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 2.04, so investors should note that it is hypothetically more volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -1.73. This means 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 1.30%. So, BIPIX is actually more expensive than its peers from a cost perspective.

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, ProFunds Biotech Ultra Sector Investor looks like a somewhat average choice for investors right now.

For additional information on the Sector - Health 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 BIPIX too 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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