• The Pax Core Bond Fund outperformed the Bloomberg Barclays US Aggregate Bond Index (Barcap Index) in the fourth quarter.

Market Review

  • During the quarter there was major monetary policy news from the Federal Reserve (“Fed”) which included their intention to begin tapering their balance sheet in the coming months as well as the release of a new “dot chart.” The dot chart is used to convey the Fed’s projection for the path of interest rates. The new chart forecasted three interest rate hikes in 2022. These announcements were generally expected, yet the reaction of fixed income market participants was mostly relief that the Fed is acting to combat high inflation.
  • Investment grade bonds as measured by the Barcap Index had a small negative return in the quarter. Negative returns from agency mortgage backed securities (MBS) overwhelmed positive results from Treasuries during the quarter, despite the latter normally dictating returns in the investment grade area of the market.


  • During the quarter, two fixed income sectors meaningfully contributed to performance. Positive issuer selection in corporate bonds and Treasuries drove outperformance. Selection in both sectors benefited from declining yields during the quarter. Multiple factors contributed to declining yields, including the emergence of the Omicron COVID variant and the aforementioned Fed announcements.


  • The two largest sector detractors from performance during the quarter were the Fund’s government-related and Asset Backed Securities (ABS). Shorter duration positioning hurt in a period of rising short-term rates and yield curve flattening.


  • Inflation and the Fed policy were hot topics again this quarter in the bond market. The Fed retired its “transitory” language pertaining to inflation and seemed to acknowledge that higher inflation may be here for longer, and as such, made major policy announcements. The tapering and new dot chart were welcomed and expected by the market, although, the moves did not clear up all uncertainty about the direction of the economy.
  • Over the past few quarters, we have been positioning for a continued improvement in the economy and slightly rising rates. Given the latest Fed news, we have shifted gears a little. We are now preparing for a steady economic environment and while we are currently comfortable with corporate bond valuations and an overweight to the sector, we are more likely to trim than add to exposure in that area of the market. In our view, there is a higher likelihood of spread1 widening compared to spread tightening.
  • Lastly, we are pleased to report that the sustainable debt market2 continues to expand its issuance across all types of impact bonds (green, social and sustainability) and sectors. The Fund continues to add impact holdings, which now make up 42% of the portfolio as of the end of December.


(as of 12/31/21)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception3
Pax Core Bond Fund - Investor Class-0.19-0.04-1.63-1.634.263.00-3.16
Pax Core Bond Fund - Institutional Class-0.170.02-1.38-1.384.513.26-3.42
Bloomberg Barclays US Aggregate Index-0.260.01-1.54-1.544.793.57-3.77
Lipper Core Bond Funds Index-0.18-0.10-1.17-1.175.483.96-4.13

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.

3The 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

(9/30/21 - 12/31/21)
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 12/31/21)
Effective Duration6.38%6.72%
Years to Maturity13.1813.75
30 Day SEC Yield

1A spread refers to the difference between two prices, rates, or yields.

2According 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.

Top 10 Holdings

(as of 12/31/21)

United States Treasury Note, 2.0% 11/15/41 3.8%, United States Treasury Note, 1.875% 11/15/51 2.7%, United States Treasury Note, 1.25% 11/30/26 2.1%, United States Treasury Note, 1.5% 11/30/28 1.5%, 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 1.0%, United States Treasury Note, 0.125%, 4/15/22 0.9%, Kfw Bankengruppe, 2.625%, 2/28/24 0.7% and European Investment Bank, 2.5%, 3/15/23 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.

IMPX0904 (4/22)

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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