Performance and Portfolio Update
- The Pax Core Bond Fund underperformed the Bloomberg Barclays US Aggregate Index in the quarter. The main driver of underperformance was security selection within the corporate bond sector, where we positioned the Fund more conservatively. As the yield curve flattened, the shorter duration corporate bonds underperformed.
- Positive security selection within Treasury securities and taxable municipals helped relative performance. In general, these sectors have greater interest rate sensitivity than the benchmark and outperformed as rates declined.
- The Fund continues to be positioned with a focus on high quality, which hurt relative performance during the quarter as corporate spreads continued to tighten. Spreads are now near historically tight levels. We maintain the view that the credit market is in the later part of the cycle and we have positioned our corporate bonds accordingly.
- During the quarter we added non-agency mortgage backed securities and asset backed securities (ABS), which are areas where we are still able to find good relative value.
- In the fourth quarter, we purchased a number of impact holdings including a Tesla Energy Solar ABS, Lynn Massachusetts Credit Union community development certificate of deposit (CD), a State of Texas taxable municipal school bond and a San Francisco water bond. Our impact holdings now stand at 13.1% of portfolio.
Performance(as of 12/31/17)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Core Bond Fund - Individual Investor Class||0.32||0.09||2.56||2.56||-||-||-||3.34|
|Core Bond Fund - Institutional Class||0.34||0.15||2.82||2.82||-||-||-||3.61|
|Bloomberg Barclays US Aggregate Index||0.46||0.39||3.54||3.54||2.24||2.10||4.01||4.53|
|Lipper Core Bond Funds Index||0.43||0.36||3.95||3.95||2.55||2.35||4.16||4.79|
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 paxworld.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 Individual Investor Class is December 16, 2016.
As of 5/1/17 prospectus, total annual Core Bond Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Individual Investor Class and Institutional Class shares are 0.74% and 0.49%, respectively.
(as of 12/31/17)
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 12/31/17)
|Years to Maturity∼||12.27||12.99|
|30 Day SEC Yield∘|
Top Ten Holdings
(as of 12/31/17)
United States Treasury Note, 1.875%, 4/30/22 5.2%, United States Treasury Note, 2.375%, 08/15/24 5.2%, United States Treasury Note, 2.750%, 11/15/47 3.4%, United States Treasury Note, 2.375%, 5/15/27 3.4%, 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 1.7%, United States Treasury Note, 2.125%, 09/30/21 1.4%, United States Treasury Note, 0.375%, 7/15/27 1.4% and United States Treasury Note, 2.125%, 3/31/24 1.4%. 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.