uploads///Portfolio Breakdown of the UBPIX

How Did the UltraLatin America ProFund’s Portfolio Do in 2015?


Jan. 27 2016, Published 6:39 p.m. ET

The UltraLatin America ProFund

The UltraLatin America ProFund – Class A (UBPIX) seeks “daily investment results, before fees and expenses that are 2x the return of the BNY Mellon Latin America 35 ADR Index for a single day.” This means that the fund aims at single-day returns only, and these returns are two times that of the underlying index. For instance, if the index rises by 2%, the fund will have returns close to 4%. When the index reports negative returns, the fund will fall by nearly twice its value.

The fund’s literature states that “for periods longer than a single day, the Fund will lose money when the level of the Index is flat, and it is possible that the Fund will lose money even if the level of the Index rises.”

This kind of a fund is known as a leveraged fund. These funds, by their very nature, are highly risky and are not suitable for conservative investors. Even aggressive investors should use caution while investing in these funds.

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As of December 2015, the fund’s assets were invested across 35 stocks and it was managing assets worth $11.3 million. As of the latest available portfolio from October, its equity holdings included CEMEX (CX), Ultrapar (UGP), Bancolombia (CIB), Enersis (ENI), Embraer (ERJ), and Empresa Nacional de Electricidad (EOC), which together comprised 9.3% of the fund’s portfolio.

Historical portfolios

For this analysis, we’ll be considering holdings as of October 2015, as that is the latest available sectoral breakdown. The post-October holdings reflect valuation-driven changes to the portfolio, not the actual holdings.

The fund mostly invests in ADRs (American depositary receipts). This is an index-tracking fund. Therefore, when we talk about its portfolio details, we’re essentially discussing the underlying index.

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The fund house had previously reported complete holdings for July 2015. At that time, consumer staples were the largest sectoral holding of the fund, making up over 30% of the fund’s portfolio. It was followed by financials, which, at that time, were just half of consumer staples’ weight. According to the latest portfolio, these two sectors have switched positions, with financials forming a quarter of the portfolio and consumer staples forming 22% of the assets.

Due to the composition of the underlying index, a substantial 12.5% of the fund’s assets are invested in the energy sector. The fund does not have any investment in the healthcare or information technology sectors.

Compared with the previous portfolio declaration, the fund’s current exposure to industrials, materials, and utilities stands reduced. On the other hand, its exposure to consumer discretionary and telecom services, especially the latter, has increased sharply. How did the fund fare in 2015 and what contributed to its performance? We’ll discuss this in the next article.


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