Performance and Portfolio Update
- The Pax Core Bond Fund slightly underperformed Bloomberg Barclays US Aggregate Bond Index in the third quarter.
- The Fund’s corporate bond and asset-backed securities detracted from performance during the quarter. The bond market in general, and treasuries in particular, had a strong quarter as slowing global growth reduced inflation fears. Many of the Fund’s corporate bonds and asset backed securities have lower duration which caused them to lag in the rally.
- The main drivers of positive relative performance were the Fund’s treasury and agency mortgage backed security positions. Many of the Fund’s treasury securities have a long duration and benefited from a declining yield environment. In addition, the Fund’s underweight to agency mortgage backed securities helped relative performance as lower rates drove an uptick in mortgage prepayments.
- Overall, we feel the Fund should be positioned to perform well in a late credit cycle environment. The portfolio remains less sensitive to credit spreads, which traditionally widen as the economy slows down. However, we have added marginally to our more credit-sensitive sectors. While we maintain the view that the risks to the credit markets outweigh the steady economy, we do recognize the Federal Reserve’s efforts to become more accommodative. As such, we have become a little less bearish.
- The Fund continues to add impact holdings to the portfolio. At the end of September 2019, approximately 27% of the Fund’s assets were in securities classified as impact, which is a growing allocation in the portfolio.
Performance(as of 9/30/19)
|Returns (%)||Average Annual Returns (%)|
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Core Bond Fund - Investor Class||-0.57||2.17||7.90||9.58||-||-||-||3.94|
|Core Bond Fund - Institutional Class||-0.55||2.13||8.09||9.84||-||-||-||4.20|
|Bloomberg Barclays US Aggregate Index||-0.53||2.27||8.52||10.30||-||-||-||4.69|
|Lipper Core Bond Funds Index||-0.52||2.21||8.96||10.16||-||-||-||4.76|
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 5/1/19 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 9/30/19)
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 9/30/19)
|Years to Maturity∼||13.38||13.03|
|30 Day SEC Yield∘|
Top 10 Holdings
(as of 9/30/19)
United States Treasury Note, 3.375%, 11/15/48 4.6%, United States Treasury Note, 2.625%, 2/28/23 4.3%, United States Treasury Note, 2.750%, 9/30/20 2.4%, United States Treasury Note, 2.125%, 11/30/23 2.2%, United States Treasury Note, 0.375%, 7/15/27 1.5%, United States Treasury Note, 4.500%, 2/15/36 1.4%, United States Treasury Note, 4.375%, 11/15/39 1.2%, United States Treasury Note, 3.500%, 2/15/39 1.1%, United States Treasury Note, 2.250%, 3/31/26 1.0% and United States Treasury Note, 2.375%, 3/15/21 1.0%. Holdings are subject to change.
ƒEffective 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.