- During the fourth quarter, the Pax Global Sustainable Infrastructure Fund (the Fund) outperformed the S&P Global Infrastructure Index (the Index).
- The Fund uses a systematic process to construct a portfolio of companies that Impax believes is providing the infrastructure driving the transition to a more sustainable economy. The portfolio has significant weight in companies providing vital resources in a sustainable fashion, including those we classify as New Energy (renewable energy generation, more efficient energy use and distribution) as well as water infrastructure. The Fund also invests in Social and Economic Infrastructure that is essential to meeting basic needs (e.g., education, health care) and enhancing the collection, transmission and processing of information.
Asset Class Conditions
- Over the fourth quarter, conventionally more defensive infrastructure companies lagged the performance of the broader US and global markets. The Fund’s differentiating thematic exposures helped it outperform the Index in October and November when the performance of traditional infrastructure companies struggled. This early gain was lost in December when traditional energy companies rallied, and sustainable New Energy companies underperformed. From a factor perspective, companies with higher dividend yields underperformed slightly during this period and was a headwind to Fund performance. This headwind was offset by the portfolio’s focus on quality factors like profitability1, which performed strongly during the reporting period.
Sustainable Infrastructure Sector Attribution
- The Fund’s outperformance relative to the Index was attributable to aspects of the Fund’s sustainable approach. The primary driver of positive return for the fourth quarter was not owning traditional transportation or energy; those sectors fall outside of the Fund’s sustainable infrastructure universe. This was a positive reversal from prior quarters when traditional energy companies outperformed and hurt Fund performance. Within sustainable infrastructure sectors, exposure to Water, Sustainable Transportation and New Energy helped performance and was led by companies like Union Pacific, Edison International and Veolia. The strong performance from these companies helped to offset the negative impact from not owning traditional utilities, which outperformed sustainable utilities owned by the Fund during the quarter.
GICS2 Sector attribution
- The Fund’s avoidance of the traditional energy sector provided a solid tailwind for the quarter. Sustainable real estate investment trusts (REITS) in Health Care and in Real Estate also helped support performance, however, Industrials was the best performing sector for this period. Outperformance in Industrials came from across multiple industries, like transportation and capital goods, as well as from owning sustainable-focused holdings and avoiding less sustainable-focused holdings, like airports. The Fund’s underweight to Utilities was a detractor to performance over the fourth quarter, as renewable utility companies underperformed traditional utility companies.
Performance(as of 12/31/21)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception3|
|Pax Global Sustainable Infrastructure Fund - Investor Class||2.46||5.03||13.86||13.86||17.84||13.32||-||13.01|
|Pax Global Sustainable Infrastructure Fund - Institutional Class||2.52||5.15||14.16||14.16||18.15||13.62||-||13.31|
|S&P Global Infrastructure Index||6.55||4.42||11.04||11.04||9.30||6.86||-||6.89|
|Russell 1000 Index||4.05||9.78||26.45||26.45||26.21||18.43||-||18.07|
|Lipper Global Infrastructure Index||6.86||7.20||14.65||14.65||12.08||9.12||-||9.63|
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 Global Sustainable Infrastructure Fund Institutional Class and the Investor Class is December 16, 2016.
Total annual Pax Global Sustainable Infrastructure Fund operating expenses, gross of any fee waivers or reimbursements, for Institutional Class and Investor Class shares are 0.65% and 90%, respectively, as of 5/1/2021 prospectus. Total annual Pax Global Sustainable Infrastructure Fund operating expenses, net of any fee waivers or reimbursements, for Institutional Class and Investor Class are 0.55% and 0.80%, respectively.ˆ
Portfolio Characteristics(as of 12/31/21)
|Market Cap (weighted avg.)∱||$49,942M||$41,729M|
|Number of Securities||133||77|
|30-Day SEC Yield (%)*||30-Day SEC yield (%)||Unsubsidized|
1 Profitability discussed here is a proprietary blended factor primarily consisting of return on equity (ROE). ROE is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporations’ profitability by revealing how much profit a company generates with the money shareholders have invested.
2 The Global Industry Classification Standard (GICS) is a widely recognized industry standard for assigning a public company to the economic sector and industry group that best defines its business. It was developed jointly by MSCI and Standard & Poor’s and is used by the MSCI indexes.
Top 10 Holdings
(as of 12/31/21)
Iberdrola SA 2.5%, Enel SpA 2.5%, Waste Management, Inc. 2.4%, Schneider Electric SE 2.0%, Taiwan Semiconductor Manufacturing Co., Ltd. 1.9%, AT&T, Inc. 1.7%, American Water Works Co., Inc. 1.7%, Union Pacific Corp. 1.5%, SSE PLC 1.5% and Edison International 1.5%. Holdings are subject to change.
*The 30-Day Yield represents net investment income earned by the Fund over the 30-Day period ended 9/30/2021, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-Day period. The 30-Day unsubsidized SEC Yield does not reflect any fee waivers/reimbursements/limits in effect.
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.
†Dividend Yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price.
∘ Return on Equity: The amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporations’ 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.