Performance and Portfolio Update

  • The Pax Core Bond Fund modestly underperformed with the Bloomberg Barclays US Aggregate Bond Index (Barcap Index) in the third quarter.
  • During the quarter, two fixed income sectors meaningfully contributed to performance. Positive selection in agency mortgage backed securities (MBS) and the Fund’s Treasury holdings drove positive relative performance. The MBS holdings in the Fund benefited from stronger prepayment characteristics, and as a result, the securities have performed better during interest rate volatility. Conversely, the Fund’s corporate bond sector detracted from returns slightly, giving back gains from earlier in the year.
  • Investment grade bonds as measured by the Barcap Index had a positive return in the third quarter, albeit a very small return at 5 basis points1. The 10-year Treasury, which drives rates for much of the investment grade market, was very volatile in the quarter but ended September virtually flat compared with start of the quarter. The 10-year Treasury yield was 1.46% as of June 30, 2021 vs 1.48% as of September 30, 2021.
  • Inflation again was a hot topic in the bond market with the consumer price index (CPI)2 and personal consumption expenditures price index (PCE)3 running well above the Federal Reserve (Fed) targets. Also, companies have reported rising input costs with commodity prices spiking. Inflation risk alongside the reemergence of COVID-19 cases and weaker economic indicators drove interest rates lower in the quarter but then a relatively hawkish Fed caused rates to jump at the end of the quarter. The bond market has been very sensitive to macro factors including Fed policy, COVID-19 and fiscal policy from Washington.
  • We continue to position the portfolio for a continued improvement in the economy and slightly rising rates. To blunt the potential rise in rates we are overweighting credit sectors including asset backed securities. However, we are taking a closer look at scaling back exposure to corporate bonds. In our view, there is higher likelihood of spread4 widening compared to spread tightening.
  • Lastly, we are pleased to report that the sustainable debt market5 continues to expand its issuance across all types of impact bonds (green, social and sustainability) and sectors. One notable recent addition to the portfolio was a 7-year sustainability-linked bond by Analog Devices. This corporate bond security has a 1.7% coupon6 that will step up 30 basis points if the company does not see a 27% greenhouse gas (GHG) emissions reduction by 2025.


(as of 9/30/21)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception7
Pax Core Bond Fund - Investor Class-0.93-0.08-1.59-1.184.80--3.34
Pax Core Bond Fund - Institutional Class-0.91-0.01-1.40-0.935.06--3.59
Bloomberg Barclays US Aggregate Index-0.870.05-1.55-0.905.36--3.96
Lipper Core Bond Funds Index-0.840.13-

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.

7The 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

(6/30/21 - 9/30/21)
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 9/30/21)
Effective Duration6.34%6.64%
Years to Maturity13.4413.64
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.

2Consumer price index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. Changes in the CPI are used to assess price changes associated with the cost of living.

3The term personal consumption expenditures (PCEs) refers to a measure of imputed household expenditures defined for a period of time. Personal consumption expenditures support the reporting of the PCE Price Index, which measures price changes in consumer goods and services exchanged in the U.S. economy.

4A spread refers to the difference between two prices, rates, or yields.

5According to research company BloombergNEF, the sustainable debt market comprises labeled bonds and loans that finance projects with green benefits, social benefits or a mixture of both.

6A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.

Top 10 Holdings

(as of 9/30/21)

United States Treasury Note, 2.25%, 5/15/41 3.8%, United States Treasury Note, 2.375%, 5/15/51 2.4%, United States Treasury Note, 0.625%, 7/31/26 2.1%, United States Treasury Note, 0.375%, 2/29/28 1.6%, United States Treasury Note, 0.375%, 7/15/27 1.1%, European Investment Bank, 3.25%, 1/29/24 1.1%, International Bank For Reconstruction & Development, 1.625%, 1/15/25 1.1%, Kfw Bankengruppe, 3.125%, 12/15/21 0.9%, European Investment Bank, 0.25%, 9/15/23 0.9% and United States Treasury Note, 0.125%, 4/15/22 0.9%. 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.

IMPX0732 (1/22)

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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