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ProFunds Can Play Key Role in Many Investment Strategies
You may have come to ProFunds with a specific strategy in mind—such as seeking to profit from rising interest rates. But have you considered how ProFunds might help you pursue your other investment strategies?
With the nation's largest lineup of index-based mutual funds¹—funds that go beyond the traditional stock and bond choices—ProFunds can complement your overall portfolio. And, because we offer this range of choices with the flexibility to adjust your portfolio as you see fit, ProFunds can play a key role in many popular investment strategies you may be pursuing. (Remember, though, that if you are pursuing tactical or rotation strategies that involve frequent exchanges, they may have tax consequences.)
Selected strategies using ProFunds
Tactical asset allocation is used by investors who like to regularly adjust their investment exposure to the overall market, or to specific market segments, to reflect their current investment view. For example, they may shift a portion of their portfolio from what they regard as a weak market segment, such as small-cap stocks, to a segment thought to have better near-term prospects, such as large-cap stocks. Keep in mind that this strategy can entail additional costs and expenses, increase volatility and decrease performance.
Sector rotation strategies involve actively moving among various economic or industry sectors to try to take advantage of changes during an economic cycle. Sectors that perform well at the bottom of the cycle may be different from those that do well at the top.The utilities industry, for example, may underperform when the economy is booming and outperform as the cycle fades. ProFunds offers a full lineup of 18 index-based UltraSector ProFunds to help investors implement this strategy. Of course, sector funds, by themselves, are not a complete investment program and past performance does not guarantee future results.
Seeking magnified returns appeals to investors who feel strongly about the outlook for the market or a market segment. For example, an investor who thought the broad stock market might consistently rise might invest in an Ultra ProFund which seeks daily investment results, before fees and expenses, that correspond to a multiple of the daily performance of its benchmark index. However, the investor must be willing to accept the potential for greater losses in exchange for the greater potential returns.
Hedging strategies may be favored by investors who seek to shield an investment against a possible decline or volatility. Technically, a hedge is an investment that should perform the opposite of an investment you want to shield. So if the value of your original investment declines, the hedged position may go up, partially offsetting the decline. The strategy will result in a loss if the original investment increases in value. If, say, an investor is concerned about the stock market's near-term direction, but likes the long-term prospects for the stocks or stock mutual funds he or she owns, the investor might use Inverse ProFunds to try to mitigate the impact of a potential market decline.
For more information about how ProFunds may fit the strategies you want to pursue, please visit www.profunds.com or contact us.
¹ Source: Lipper. July 22, 2008. Lipper defines ''indexed fund'' as an open-end mutual fund (not an Exchange Traded Fund, or ETF) that falls into one of the following subcategories: pure index, enhanced index or index-based. The majority of ProFunds are categorized by Lipper as enhanced index funds.
Investing in ProFunds involves certain risks, including in all or some cases, leverage, liquidity, concentration, non-diversification and repurchase agreement risks. These risks can increase volatility and decrease performance. Please see the prospectus for a more complete description of these risks. All ProFunds permit active investment strategies that can decrease performance and increase expenses.
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