• The Pax Core Bond Fund outperformed the Bloomberg Barclays US Aggregate Bond Index (Barcap Index) in the first quarter.

Market Review

  • The first quarter of 2022 proved to be the biggest quarterly loss (-5.93%) for the Barcap Index since 1980. This challenging market environment was fueled by the war in Ukraine and the Federal Reserve’s (Fed) first interest rate increase since 2018. At the March Federal Open Market Committee (FOMC) policy meeting, the committee raised the Federal Funds rate by 25 basis points,1 projected a steeper path to interest rate hikes and released an updated Summary of Economic Projections that showed higher short-term inflation and lower short-term economic growth.
  • This monetary policy news and economic projections resulted in a flattening yield curve as short-term yields surged while long-term yields climbed to a lesser extent due to concerns around higher inflation and lower economic growth.


  • During the quarter, positive contributors to performance included security selection within government related securities, the Fund’s allocation to Asset Backed Securities (ABS) and the portfolio’s cash position.
  • Within the government-related portion of the portfolio, the supranational holdings performed well due to their shorter duration positioning and higher quality credit ratings. Similar to supranational securities, ABS in the portfolio are mostly shorter-dated securities and contributed to relative performance because they were impacted less from rising interest rates.
  • The portfolio’s lack of Energy sector exposure was a contributor to relative performance, which in a period of rising energy prices was unusual. Many Barcap Index energy holdings are large multinational energy companies that chose to divest from Russia, and as a result, had to write down billions of dollars. This offset the benefit of rising energy prices.


  • The largest detractor from performance was the Fund’s Treasury securities which are longer durated than the benchmark, and as a result, were impacted by rising interest rates to a greater extent. We manage a duration-neutral portfolio, and our allocation to Treasury holdings helps offset shorter-duration positions in other sectors.


  • Inflation and Fed policy continue to be major drivers of the bond market. The Fed’s recent move detailed above, roiled the market and spurred a move to higher rates and a flatter yield curve. Additional rate hikes and balance sheet tightening are expected in the coming months.
  • As we stated last quarter, we have begun trimming corporate bond exposure. Slower economic growth and higher inflation, in general, are not a positive backdrop for corporate bond exposure. We have been investing the proceeds in agency Mortgage Backed Securities (MBS). Even though MBS are expected to be part of the Fed’s quantitative tightening, we believe that scenario has been overly priced into the securities’ valuation.


(as of 3/31/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
Pax Core Bond Fund - Investor Class-2.59-5.78-5.78-4.211.321.64-1.85
Pax Core Bond Fund - Institutional Class-2.57-5.73-5.73-3.971.571.89-2.11
Bloomberg Barclays US Aggregate Index-2.78-5.93-5.93-4.151.692.14-2.40
Lipper Core Bond Funds Index-2.67-5.98-5.98-

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. For most recent month-end performance information call 800.767.1729 or visit

Figures include reinvested dividends, capital gains distributions and changes in principal value.

2The inception date for the Pax Core Bond Fund Institutional Class and Investor Class is December 16, 2016.

As of the 5/1/21 prospectus, total annual Core Bond Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Investor Class and Institutional Class shares are 0.72% and 0.46%, respectively.

Performance Attribution

(12/31/21 - 3/31/22)
Sector: Average Active Weights (%)
Total Relative Contribution (%)

XOther: ETFs (for short-term cash mgmt. purposes) and Cash & Equivalents. Past performance is no guarantee of future results. Short term performance may not be indicative of long term results.

Portfolio Characteristics

(as of 3/31/22)
Effective Duration6.22%6.52%
Years to Maturity13.3613.58
30 Day SEC Yield

1Basis points, otherwise known as bps, is a unit of measure to describe the percentage change in the value of financial instruments or the rate change in an index or other benchmark. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.

Top 10 Holdings

(as of 3/31/22)

United States Treasury Note, 2.0% 11/15/41 2.5%, United States Treasury Note, 2.25% 02/15/52 2.1%, United States Treasury Note, 1.875% 02/28/27 1.5%, United States Treasury Note, 1.875% 02/28/29 1.1%, European Investment Bank, 3.25%, 1/29/24 1.1%, International Bank For Reconstruction & Development, 1.625%, 1/15/25 0.9%, United States Treasury Note, 0.125%, 4/15/22 0.8%, United States Treasury Note, 0.375%, 7/15/27 0.7%, Kfw Bankengruppe, 2.625%, 2/28/24 0.7% and European Investment Bank, 2.5%, 3/15/23 0.7%. Holdings are subject to change.


Effective Duration is a measure of a security’s price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.
Years to Maturity (weighted average) is the number of years until the bond matures and/or expires.
30-Day SEC Yield: An annualized yield based on the most recent 30-day period.

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.

IMPX1044 (7/22)

Anthony Trzcinka, CFA®

Senior Portfolio Manager

Anthony (Tony) Trzcinka is a Senior Portfolio Manager at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

He is a Senior Portfolio Manager of the Core Bond Strategy, which includes the Pax Core Bond Fund. Tony is also a member of the Pax Sustainable Allocation Fund portfolio management team. A pioneer in sustainable fixed income investing, Tony has been managing strategies investing in impact bonds for over 10 years.

Tony has been responsible for multiple strategies since joining the firm in 2003. Before Impax, Tony spent three years as an Assistant Vice President at AEW Capital Management, where he worked in a Senior Analyst role. He began his financial services career as an analyst in 1999.

Tony is a CFA® charterholder and a member of the Boston Security Analysts Society. He holds an MBA from Northeastern University and a Bachelor of Arts from the University of Massachusetts.

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