Performance and Portfolio Update
- The Pax Core Bond Fund outperformed the Bloomberg Barclays US Aggregate Index in the quarter. The main driver of outperformance was security selection within the corporate sector. The portfolio is positioned more conservatively with less spread duration†, which helped relative performance as credit markets weakened.
- The Fund continues to be positioned with a focus on high quality which helped during the quarter as corporate spreads widened. We maintain the view that the risks to the credit market – rising rates, tariffs, and late in credit cycle dynamics – outweigh the positive momentum in the economy. As such, we have positioned the Fund’s corporate bonds accordingly.
- An underweight to agency mortgage-backed securities (MBS) was the largest detractor from performance in the quarter. These securities benefited as investors sought out higher quality bonds to protect against the geopolitical risks that appeared during the quarter.
- During the quarter, we continued to add to our non-agency securitized portfolio. These include both residential and asset-backed securities.
- We continued to add new impact holdings during the quarter as well, including five solar issues and one student loan issue. Our impact holdings now stand at 19% of the Fund’s allocation.
Performance(as of 6/30/18)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Core Bond Fund - Investor Class||-0.10||-0.10||-1.55||-0.87||-||-||-||1.21|
|Core Bond Fund - Institutional Class||-0.08||-0.04||-1.43||-0.62||-||-||-||1.47|
|Bloomberg Barclays US Aggregate Index||-0.12||-0.16||-1.62||-0.40||1.72||2.27||3.72||1.95|
|Lipper Core Bond Funds Index||-0.10||-0.27||-1.72||-0.45||1.93||2.51||3.98||2.05|
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 paxstaging.wpengine.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
1The inception date for the Pax Core Bond Fund Institutional Class and Investor Class is December 16, 2016.
As of 5/1/18 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 0.71% and 0.46%, respectively.
(as of 6/30/18)
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.
Portfolio Characteristics(as of 6/30/18)
|Years to Maturity∼||13.40||12.89|
|30 Day SEC Yield∘|
Top Ten Holdings
(as of 6/30/18)
United States Treasury Note, 3.000%, 2/15/48 5.1%, United States Treasury Note, 2.375%, 08/15/24 4.8%, United States Treasury Note, 2.625%, 2/28/23 4.8%, United States Treasury Note, 2.125%, 11/30/23 2.1%, United States Treasury Note, 1.375%, 1/15/20 1.7%, United States Treasury Note, 4.500%, 02/15/36 1.6%, United States Treasury Note, 2.375%, 3/15/21 1.4%, United States Treasury Note, 0.375%, 7/15/27 1.4%, United States Treasury Note, 4.375%, 11/15/39 1.4% and United States Treasury Note, 0.125%, 4/15/22 0.9%. Holdings are subject to change.
†Spread duration is the sensitivity of the price of a bond to a 100 basis point change to its option-adjusted spread. As the rate of the Treasury security in the option-adjusted spread increases, the rate of the option-adjusted spread also increases. A basis point (bps) is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.
∱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.