• The Pax Core Bond Fund underperformed the Bloomberg Barclays US Aggregate Bond Index (Barcap Index) in the second quarter of 2022.

Market Review

  • Volatility has remained high, with both equity and bond markets weak over the quarter. Persistent high inflation across most western economies has resulted in many central banks raising interest rates and tightening liquidity. The US Federal Reserve (Fed) increased base rates twice over the period, and further rate hikes are anticipated by markets before year end. The Fed also kicked off its Quantitative Tightening program allowing $30 billion of treasuries and $17.5 billion of Mortgage-Backed Securities (MBS) to mature every month. In September, the Fed plans to cut $95 billion a month from its holdings, split between $60 billion of Treasuries and $35 billion of MBS. Finally, they introduced a new “Dot Plot”, which the US central bank will use to signal its outlook for the path of interest rates, and a quarter Summary of Economic Projections (SEP). Both releases showed big changes, with the Dots showing Fed funds reaching 3.4% by year end and the SEP cutting GDP to 1.75% in 2022 and 2023 and unemployment rising to 4.1% in 2023. Many market participants took this news as a sign of a higher chance of stagflation and recession. The Yield Curve’s immediate response was to steepen.


  • During the quarter the Pax Core Bond Fund’s selection within Government-Related securities, allocation to Asset backed Securities (ABS) and cash position were the large positive contributors. Within Government-Related securities, Supranational holdings performed well. In general, Supranationals are shorter dated with strong credit ratings. ABS was one of the few sectors that had a positive excess return during the quarter. Similar to Supranationals, ABS are mostly shorter dated securities that felt less of an impact from rising rates.
  • An underweight to Energy (the Fund is Fossil Fuel Free) also added modestly to performance.


  • The largest detractor and primary source of underperformance during the period was the allocation to and selection within Treasuries. Treasury holdings have longer duration than the benchmark and as a result were negatively impacted by rising rates.


  • Inflation and Fed policy continue to be major drivers of the bond market. The Fed’s recent moves shook the market and spurred a move to higher rates. More rate hikes and balance sheet tightening are expected in coming months. Many market participants expect a recession within the next 12-18 months.
  • The Portfolio Managers have trimmed corporate bond exposure due to rising rates and slower earnings and invested proceeds in Agency Mortgage-Backed securities. Even though MBS will most likely be part of Quantitative Tightening, the Portfolio Managers believe that this scenario has already been priced in.


(as of 6/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Pax Core Bond Fund - Investor Class-1.68-4.85-10.36-10.46-1.280.41-0.86
Pax Core Bond Fund - Institutional Class-1.76-4.79-10.24-10.24-1.070.66-1.11
Bloomberg Barclays US Aggregate Index-1.57-4.69-10.35-10.29-0.930.88-1.40
Lipper Core Bond Funds Index-1.90-5.24-10.91-10.88-0.651.06-1.61

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.

1The inception date for the Pax Core Bond Fund Institutional Class and Investor Class is December 16, 2016.

As of the 5/1/22 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.

Performance Attribution

(3/31/22 - 6/30/22)
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 6/30/22)
Effective Duration6.14%6.39%
Years to Maturity13.3513.27
30 Day SEC Yield

Top 10 Holdings

(as of 6/30/22)

United States Treasury Note, 3.25, 5/15/42 4.0%, United States Treasury Note, 2.875%, 5/15/52 2.9%, United States Treasury Note, 2.750%, 4/30/27 2.4%, United States Treasury Note, 2.875%, 4/30/29 1.4%, European Investment Bank, 3.25%, 1/29/24 1.1%, International Bank For Reconstruction & Development, 1.625%, 1/15/25 1.0%, United States Treasury Note, 1.875%, 2/15/32 0.9%, United States Treasury Note, 2.750%, 5/15/25 0.8%, European Investment Bank, 2.5%, 3/15/23 0.7% and Kfw Bankengruppe, 2.625%, 2/28/24 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.

IMPX1153 (10/22)

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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