Performance and Portfolio Update
- The Fund underperformed its benchmark (60% S&P 500 Index/ 40% Bloomberg Barclays US Aggregate Bond Index) during the third quarter. The Fund’s asset allocation positioning was favorable during the period. However, performance of the underlying funds detracted from relative performance.
- The Fund’s overweight to equities and underweight to bonds helped performance as equities outperformed bonds during the period. The allocation to non-US Developed Market stocks contributed positively to performance as the MSCI EAFE Index† outperformed the S&P 500 Index‡. The allocation to mid cap stocks detracted modestly as large-cap stocks outperformed both mid-cap and small-cap stocks during the period.
- The majority of the underperformance in the equity underlying funds came from the Pax Large Cap Fund and the Pax Mid Cap Fund. The Pax Large Cap Fund underperformed the S&P 500 Index largely due to weak stock selection within Consumer Discretionary, Energy and the Materials sectors. The Pax Mid Cap Fund underperformed the Russell Mid Cap Index§ as holdings within Financials, Technology and Consumer Discretionary were key detractors. In the fixed income allocation, the Pax Core Bond Fund was a modest detractor as it underperformed the Bloomberg Barclays US Aggregate Bond Index8 primarily due to weak security selection within the corporate bond sector.
- US equities continue to rise without much regard for risk, driven largely by momentum. At quarter end, the S&P 500 Index valuation was at multi-decade highs with the VIX Index, a common measure of investor risk, at 10-year lows. While momentum and positive economic and earning reports may continue to drive markets higher in the near term, the equity markets remain vulnerable to correction when risks are inevitably priced in. We believe non-US Developed markets look attractive in relation to the US market, especially based on valuation measures. We have increased our exposure to non-US Developed Markets during the period.
Performance(as of 9/30/17)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Balanced Fund - Individual Investor Class||0.74||2.58||9.02||8.83||5.66||7.86||4.05||8.32|
|Balanced Fund - Institutional Class||0.73||2.64||9.18||9.05||5.91||8.12||4.31||8.38|
|S&P 500 Index||2.06||4.48||14.24||18.61||10.81||14.22||7.44|
|60% S&P 500 Index / 40% Bloomberg Barclays US Aggregate Bond Index||1.05||3.02||9.70||10.90||7.65||9.34||6.47|
|Lipper Mixed-Asset Target Growth Funds Index||1.51||3.62||12.30||13.30||7.05||9.45||5.65|
Performance data quoted represent past performance, which does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain performance for the most recent month-end call 800.767.1729 or visit paxworld.wpengine.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
1The inception date for the Pax Balanced Fund Institutional Investor Class is April 2, 2007 and the Individual Investor Class inception date is August 10, 1971. The performance information shown for Institutional Class shares includes the performance of Individual Investor Class shares for the period prior to Institutional Class inception. Expenses have not been adjusted to reflect the expenses allocable to Institutional Class shares. If such expenses were reflected, the returns would be higher than those shown.
Effective 5/1/2017, the Pax Balanced Fund Net Annual Fund Operating Expense ratio including acquired Fund Fees and net fee waivers or reimbursements for the Institutional Share Class is 0.63%, the Total Annual Fund Operating Expense ratio including acquired Fund Fees and gross fee waivers or reimbursements is 0.68%. The Pax Balanced Fund Net Annual Fund Operating Expense ratio including acquired Fund Fees and net fee waivers or reimbursements for the Individual Investor Share Class is 0.93%, the Total Annual Fund Operating Expense ratio including acquired Fund Fees and gross fee waivers or reimbursements is 0.92%.
Asset AllocationRelative Contribution (%)
Past performance is no guarantee of future results.
XThe Inception date of the Pax Large Cap Fund, Pax ESG Beta Dividend Fund and Pax Core Bond Fund is December 16, 2016.
Asset Allocation (%)(as of 9/30/17)
|Pax Large Cap Fund∼||39.3|
|Pax ESG Beta® Dividend Fund∼||7.2|
|Pax Mid Cap Fund||7.4|
|Pax MSCI EAFE ESG Leaders Index Fund||10.6|
|Pax Core Bond Fund∼||35.0|
|Cash & Other||0.5|
Top Ten Holdings
(as of 9/30/17)
Apple, Inc. 2.4%, Microsoft Corp. 2.3%, Amazon.com, Inc. 1.7%, Cisco Systems, Inc. 1.7%, Berkshire Hathaway, Inc., Class B 1.4%, Biogen Idec, Inc. 1.3%, Stanley Black & Decker, Inc. 1.3%, Ingersoll-Rand PLC 1.3%, Waste Management, Inc. 1.3% and Merck & Co., Inc. 1.2%. Holdings are subject to change.
†The MSCI EAFE (Europe, Australasia, Far East) (Net) Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US and Canada. The MSCI EAFE Index consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Performance for the MSCI EAFE Index is shown “net,” which includes dividend reinvestments after deduction of foreign withholding tax. One cannot invest directly in an index.
‡Standard & Poor’s 500 Stock Index is an unmanaged index of large capitalization common stocks.
§The Russell Midcap Index measures performance of the mid-capitalization sector of the US equity market. The index is a float-adjusted, capitalization-weighted index of the 800 smallest issuers in the Russell 1000 Index. The index is a subset of the Russell 1000 Index and serves as the underlying index for the Russell Midcap Growth and Value Index series. The Index is reconstituted annually. One cannot invest directly in any index.
8Bloomberg Barclays US Aggregate Bond Index represents securities that are US domestic, taxable and dollar denominated. The index covers the US investment grade fixed rate bond market, with index components for government and corporate securities and asset-backed securities. One cannot invest directly in an index.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) is a measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. It is a widely-used measure of market risk and shows the market’s expectation of 30-day volatility. One cannot invest directly in an index.
The statements and opinions expressed are those of the author as of the date of this report. All information is historical and not indicative of future results and subject to change. This information is not a recommendation to buy or sell any security. Past performance does not guarantee future results.