• The Pax Core Bond Fund outperformed the Bloomberg Barclays US Aggregate Bond Index in the third quarter.

Market Review

  • During the quarter there was continued major monetary policy news from the US Federal Reserve (The Fed). The Fed followed a 75 basis point (bps)1 increase in rates at their June 15th meeting with two more 75 bps increases in the July 27th and September 21st meetings, leaving the current Fed fund rates at 3.0% – 3.25%. The Fed also increased its quantitative tightening program by allowing $60 billion in Treasurys and $35 billion in mortgage backed securities to mature every month. The Fed also released a new dot plot and their summary of economic projections (SEP). There were significant changes to both. The median dots showed Fed funds reaching 4.375% by the end of 2022 and a 4.6% terminal rate by the end of 2023, implying another 125 bps of rate hikes in the two remaining Fed meetings. The SEP cut GDP growth to 0.2% in 2022 and 1.2% in 2023, representing significant cuts from their June release, with both projections previously noting 1.7% growth. Additionally, the SEP had the unemployment rate rising to 3.8% in 2022 and 4.4% in 2023. Markets reacted to this new information and bonds sold off in anticipation of higher rates and slower growth.


  • During the quarter, our security selection within government related securities and corporates, and our allocation to asset backed securities (ABS) were large positive contributors. Within government related securities, our supranational holdings performed well. In general, these securities are shorter dated with strong credit ratings. Allocation to the ABS sector was also a positive contributor, which like supranationals, are mostly shorter dated securities that were impacted less by rising rates.
  • Within corporates the portfolio’s high yield exposure and overweight to financials helped. High yield had a negative total return over the reporting period, but outperformed Investment grade securities. At the end of the reporting period, the Fund’s high yield exposure was in the 4.5% range.


  • The largest detractor was the Treasury portfolio. Both security allocation and selection detracted. The Fund was underweight Treasurys, and Treasurys were one of the best performing asset classes on a relative basis. The portfolio’s Treasury holdings have a longer duration than the benchmark and, as a result, were impacted by the rising rate environment.


  • Inflation, Fed policy and corporate earnings continue to be major drivers of the bond market. The Fed’s recent moves detailed above roiled the market and spurred a move to higher rates. Additional rate hikes and balance sheet tightening are expected in the coming months. Consensus views expect a recession within the next 12-18 months, and with earnings season on the horizon, forward guidance will be critical. There is some market uncertainty around whether companies have fully accounted for the economic slowdown, and Impax expects to see more downside guidance. Results of this earnings season will help us calibrate the portfolio’s risk positioning.


(as of 9/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
Pax Core Bond Fund - Investor Class-4.16-4.53-14.42-14.45-3.49-0.64-0.02
Pax Core Bond Fund - Institutional Class-4.24-4.47-14.26-14.24-3.25-0.39-0.27
Bloomberg Barclays US Aggregate Index-4.32-4.75-14.61-14.60-3.26-0.27-0.49
Lipper Core Bond Funds Index-4.42-4.56-14.97-15.06-2.89-0.06-0.72

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 5/1/22 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

(6/30/22 - 9/30/22)
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 9/30/22)
Effective Duration5.91%6.15%
Years to Maturity13.3213.02
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 9/30/22)

United States Treasury Note, 3.25, 5/15/42 4.0%, United States Treasury Note, 3.25, 6/30/27 2.9%, United States Treasury Note, 2.875%, 5/15/52 2.6%, United States Treasury Note, 3.00, 7/15/25 1.2%, United States Treasury Note, 2.875%, 4/30/29 1.2%, 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, 2.875, 5/15/32 0.9%, 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.

IMPX1271 (1/23)

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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