uploads///Portfolio Breakdown of the UBPIX

Exploring UBPIX’s Sectoral Composition


Sep. 9 2016, Published 3:15 p.m. ET

UltraLatin America ProFund overview

The UltraLatin America ProFund (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 funds 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%. The same applies for times when the index reports negative returns—the fund will fall nearly twice its value (adjusted for fees and expenses.)

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 aren’t suitable for conservative investors. Even aggressive investors should use caution when investing in these funds.

The fund’s assets were invested across 35 stocks in July 2016, and it was managing assets worth $25 million. In April, its equity holdings included Banco de Chile (BCH), Coca-Cola (KOF), Embraer (ERJ), YPF (YPF), and CPFL Energia (CPL).

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Portfolio changes in the UltraLatin America ProFund

UBPIX invests only in ADRs (American depositary receipt) of Latin American companies. Remember that UBPIX is an index-tracking fund. Hence, when we talk about its portfolio details, we’re essentially discussing the underlying index.

The financials, consumer staples, and energy sectors form the core of the fund’s investments. These three sectors combined form 61% of the fund’s portfolio. The materials and telecommunications services sectors also form over 10% of the portfolio each. The fund isn’t invested in the information technology or healthcare sectors.

We’ve looked at the quarterly portfolios of UBPIX for the past three years leading up to June 2016. A look at the graph above will show you that quite a few noticeable changes have taken place in the fund’s sectoral composition. For instance, consumer staples stocks used to form 35% of its portfolio, and now their weight has fallen to ~20%. The energy sector has seen a similar fall.

On the other end of the spectrum are telecommunications services, utilities, and financials stocks, all of which have seen sharp rises in their respective portfolio weights.

How has UBPIX fared year-to-date, and why? Let’s take a look in the next article.


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