United StatesPerformance and Portfolio Update
- The Pax Global Environmental Markets Fund outperformed the global equity markets (MSCI ACWI) and the comparative environmental markets index (FTSE Environmental Opportunities All Share) during the third quarter.
- As measured by MSCI ACWI, global equity markets produced positive returns in the third quarter. Yet this figure belies the complexity that investors faced while navigating equity markets during the period. Trade tariffs, Brexit, rising interest rates, and nervousness around emerging markets tested investors’ convictions in their portfolios.
- After contributing strong returns in 2017, Industrials struggled in the first half of this year. Yet, as is often the case, such sector rotations can be exaggerated. Many industrials in the portfolio, particularly US names, proved oversold after announcing strong results in the quarter, including top contributors Hubbell (US, Power Network Efficiency) and Xylem (US, Water Infrastructure). Both names recovered in the third quarter after selling off earlier this year.
- Holdings in the portfolio with automotive end markets were negatively impacted by the ongoing trade war. Share prices for Delphi Technologies (UK, Transportation Energy Efficiency) and Aptiv (UK, Transportation Energy Efficiency) both lagged the overall market on worries relating to the newly imposed tariffs, weaker car sales and challenges posed by higher component prices.
- The Fund benefits from two attributes: First, a seasoned and stable specialist investment team which has been investing in attractive growth opportunities in environmental markets through diverse market conditions for 20 years. Second, the Fund is based on a vetted investment philosophy which focuses on long-term growth drivers that remain as forceful and diverse as ever.
- Consensus expectation of earnings growth for the Fund is anticipated to be higher than MSCI ACWI over the next 12 months.X This is a testament to the strength and potential of the companies in the portfolio. The investment team continues to be particularly enthusiastic about the outlook for investments in companies focusing on solutions in Energy Efficiency, Water, Waste and Sustainable Food and Agriculture.
Performance(as of 9/30/18) | 1-Month | Quarter | YTD | 1 Year | 3 Year | 5 Year | 10 Year | Since Inception1 |
|---|---|---|---|---|---|---|---|---|
| Global Environmental Markets Fund - Investor Class | 0.7 | 4.55 | -0.86 | 4.31 | 13.35 | 7.51 | 8.48 | 5.95 |
| Global Environmental Markets Fund - Class A | 0.76 | 4.55 | -0.85 | 4.38 | 13.36 | 7.52 | 8.49 | 5.96 |
| Global Environmental Markets Fund - Institutional Class | 0.76 | 4.65 | -0.67 | 4.61 | 13.63 | 7.77 | 8.76 | 6.23 |
| MSCI ACWI (Net) Index | 0.44 | 4.28 | 3.83 | 9.77 | 13.4 | 8.67 | 8.19 | 5.73 |
| FTSE Environmental Opportunities Index Series | -0.47 | 2.82 | -0.66 | 5.53 | 15.96 | 9.15 | 9.48 | - |
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 paxstaging.wpengine.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
1The inception date for the Pax Global Environmental Markets Fund Institutional Class and the Investor Class is March 27, 2008. The Class A shares inception date is May 1, 2013.
Total annual Global Environmental Markets Fund operating expenses, gross of any fee waivers or reimbursements, for Institutional Class, Investor Class and Class A shares are 1.02%, 1.26%, and 1.26%, respectively, as of 5/1/2018 prospectus. Total annual Global Environmental Markets Fund operating expenses, net of any fee waivers, reimbursements and acquired fund fees and expenses, for Institutional Class, Investor Class, and Class A shares were 0.98%, 1.23% and 1.23%, respectively.
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 9.23% (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 (as of 9/30/18) | 1-Month | Quarter | YTD | 1 Year | 3 Year | 5 Year | 10 Year | Since Inception1 |
|---|---|---|---|---|---|---|---|---|
| Global Environmental Markets Fund - Class A (Load) | -4.80 | -1.18 | -6.32 | -1.38 | 11.23 | 6.31 | 7.88 | 5.40 |
Performance AttributionEnvironmental Markets Classification | Total Relative Contribution (%) |
|---|---|
 |  |
XThe Environmental Markets Classification System (EMCS) is a comprehensive global classification system for environmental markets. Environmental market companies are defined as providing products and services that deliver solutions to environmental challenges, and include environmental technology. Relative results of the Fund compared to the FTSE Environmental Opportunities All Shares Index. Source: FTSE.
Past performance is no guarantee of future results.
Portfolio Characteristics(as of 9/30/18) | Fund | Benchmark |
|---|---|---|
| Market Cap (weighted avg.)∱ | $24,078M | $160,558M |
| Forward Price/Earnings∼ | 18.22 | 15.85 |
| ROE∘ | 16.08 | 17.58 |
| Beta∞ | 1.03 | 1.00 |
| Number of Securities | 46 | 2,791 |
Top Ten Holdings
(as of 9/30/18)
Sealed Air Corp. 4.0%, TE Connectivity, Ltd. 3.4%, Siemens AG 3.4%, Suez 3.3%, Danaher Corp. 3.3%, Ecolab, Inc. 3.1%, Xylem, Inc. 3.1%, East Japan Railway Co. 3.0%, Hubbell, Inc. 3.0% and Ferguson PLC 2.9% Holdings are subject to change.
Definitions
XEarnings growth is 14% for the Fund and 9% for the MSCI ACWI Index as of 9/30/18. This is a proprietary calculation based on the price-to-earnings last 12 months (P/E LTM) divided by the price-to-earnings over the next 12 months (P/E NTM).
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 2 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.
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