Performance and Portfolio Update

  • The Pax ESG Beta Quality Fund underperformed the benchmark Russell 1000 Index in the fourth quarter. The main drivers of the return difference were factors used in the strategy construction.
  • The overweight towards quality factors weighed on relative returns for the period. The Fund’s exposure to companies with risk mitigating factors (i.e., low beta1 and residual volatility2) was the largest detractor, as riskier stocks outperformed low-volatility stocks. Exposure to companies with higher profitability and earnings quality were also material detractors.
  • Weighting the portfolio toward companies with stronger ESG characteristics is one of the five factors used in this smart beta strategy, which is designed to deliver strong long-term investment performance. On a short-term basis, however, ESG and other factors can negatively affect returns. During the quarter, companies with stronger ESG profiles, particularly those in the top quartile as measured by the Impax Sustainability Score, underperformed companies with weaker ESG profiles. The Fund’s overweight to the strongest ESG profiles and underweight to the weaker ESG profiles detracted from relative performance.
  • Industry exposures, which are driven by the factor and ESG tilts, detracted slightly from relative returns for the quarter. Particularly, an underweight to banks and an overweight to insurers hurt relative results.

Performance

(as of 12/31/20)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception3
Pax ESG Beta Quality Fund - Investor Class3.7010.9013.3413.3411.2212.2511.316.19
Pax ESG Beta Quality Fund - Class A3.7110.8913.3313.3311.2012.2511.316.19
Pax ESG Beta Quality Fund - Institutional Class3.7110.9713.5713.5711.4912.5211.586.34
Russell 1000 Index4.2313.6920.9620.9614.8215.6014.01-
Lipper Multi-Cap Core Funds Index4.6815.6921.2021.2013.0914.3712.25-

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. To obtain performance for the most recent month-end, call 800.767.1729 or visit impaxam.com

Figures include reinvested dividends, capital gains distributions and changes in principal value.

3The inception date for the Pax ESG Beta Quality Fund Institutional Class is April 2, 2007, the Investor Class inception date is June 11, 1997, and the Class A shares inception date is May 1, 2013.

The performance information shown for Institutional Class shares represents the performance of the Investor Class shares for the period prior to Institutional Class inception (April 2, 2007). Expenses have not been adjusted to reflect the expenses allocable to Institutional Class shares. If such expenses were reflected, the returns would be higher than those shown. Institutional Class shares average annual return since April 2, 2007, is 8.94% (annualized).

Total annual Pax ESG Beta Quality Fund operating expenses, gross of any fee waivers or reimbursements, for Investor Class, Class A and Institutional Class shares are 0.90%, 0.90% and 0.65%, respectively, as of 5/1/2020 prospectus.ˆ  

The performance information shown for Class A represents the performance of the Investor Class shares for the period prior to Class A inception. Expenses have not been adjusted to reflect the expenses allocable to Class A shares. Class A inception date return since May 1, 2013, is 12.54% (annualized). A 1.00% CDSC (contingent deferred sales charge) may be charged on any shares sold within 18 months of purchase over $1 million. POP (public offering price) reflects the maximum sales load for the Fund’s Class A Shares of 5.50%.

Performance
after sales charge

(as of 12/31/20)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception3
Pax ESG Beta Quality Fund - Class A (Load)-2.004.807.117.119.1410.9910.685.94

Factors


(for quarter ended 12/31/20)
Factor Exposure
Total Relative Factor
Contribution (%)

Past performance is no guarantee of future results.
4Beta reflects the sensitivity of a Fund’s return to fluctuations in its benchmark; A beta for a benchmark is 1.00: a beta greater than 1.00 indicates above-average volatility and risk.

Portfolio Characteristics

(as of 12/31/20)
FundBenchmark
Market Cap (weighted avg.)$417,246M$437,659M
Forward Price/Earnings19.0625.28
ROE30.7422.76
Beta
0.911.00
Number of Securities1521,017

1 A low beta value typically means that the stock is considered less risky, but will likely offer low returns as well.
2 Residual volatility measures how much an investment’s price jumps around relative to its relationship to an index or other benchmark. It is directly tied to beta, which is a measure of whether a given investment’s fluctuations are larger or smaller than that of another index. The factor is used in assessing risk levels and returns.


Top 10 Holdings

(as of 12/31/20)
Apple, Inc. 6.0%, Microsoft Corp. 4.6%, Amazon.com, Inc. 3.9%, Alphabet, Inc., Class A 3.0%, Texas Instruments, Inc. 2.8%, Verizon Communications, Inc. 2.7%, Thermo Fisher Scientific, Inc. 2.6%, Johnson & Johnson 2.2%, Allstate Corp., The 1.8% and MetLife, Inc. 1.8%. Holdings are subject to change.

Definitions

ƒWeighted Average is an average in which each quantity to be averaged is assigned a weight. These weightings determine the relative importance of each quantity on the average.
Forward Price-Earnings Ratio or P/E FY1 ratio is a ratio for valuing a company that measures its current share price relative to its per-share earnings over the next 12 months.
Return on Equity: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
A historical Beta is used for Funds with greater than 3 years of performance history under the same mandate. Three-year Beta is used. Beta reflects the sensitivity of a Fund’s return to fluctuations in its benchmark; a beta for a benchmark is 1.00; a beta greater than 1.00 indicates above-average volatility and risk.

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.

IMPX0061 (4/21)

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