Performance evaluation of the Europe 30 ProFund
The Europe 30 ProFund Investor Class (UEPIX) has risen 1.9% YTD (year-to-date). It’s one of only two funds in this review to have risen in the period.
This rise has made it the best performer of 2016 so far in the group of 12 funds chosen for this review.
Except for the one-year period, in which it ranks fourth, the fund has been the top performer for all periods plotted in the graph above. We’ve graphed its performance against the Vanguard FTSE Europe ETF (VGK) and the iShares MSCI Eurozone ETF (EZU).
Let’s look at what has contributed to this stellar performance by the fund YTD.
Contribution to returns
The fund’s strategy, along with its high-exposure energy stocks, has been extremely beneficial in 2016, especially after February 11, 2016, when crude oil prices touched a multiyear low. All stock holdings from the sector have contributed positively. These include Royal Dutch Shell (RDS.A), Statoil (STO), and Tenaris (TS).
Materials are a distant second. Both ArcelorMittal (MT) and Rio Tinto (RIO) have contributed positively. Consumer staples have tailed materials and have been led by British American Tobacco (BTI) and Unilever (UN). National Grid (NGG), the sole holding from utilities, has contributed positively as well.
Financials have dragged on the positive contributions by the above-mentioned sectors quite substantially. It has been led down by Barclays (BCS), ING Groep (ING), and HSBC Holdings (HSBC). The absence of any positive contributors has hurt the sector as well.
Industrials are in the red due to Ryanair Holdings (RYAAY), while Telefonica (TEF) has dragged telecommunications services down. Technology stocks have found themselves in negative territory, although only slightly, as positive contributions from ASML Holding (ASML) and Criteo (CRTO) have been neutralized by Telefonaktiebolaget LM Ericsson (ERIC), Nokia (NOK), and Alcatel-Lucent (ALU).
UEPIX is uniquely positioned, which has helped it YTD. Its high energy exposure became immensely beneficial when crude oil prices started rising following February 11, 2016.
It’s important for investors to note that the fund’s holdings are quite concentrated, with only 30 stocks making up its portfolio. Further, the rebalancing of the underlying index is done only once a year. If its composition isn’t favored by market movements, it can perform poorly for extended periods of time. Its investment in ADRs (American depositary receipt) exposes it to currency risk as well.
In the next article of this series, we’ll look at the JPMorgan Intrepid European Fund Class A (VEUAX).