• The Pax High Yield Bond Fund underperformed its benchmark index in the first quarter with an Institutional Class return of -5.09% versus -4.58% for the ICE BofAML US Cash Pay High Yield Constrained (BB-B) Index. The Fund’s lack of exposure to traditional Energy was the primary drag to performance in this period and offset positive contributions in the Banking and Services sectors. Compared to a benchmark without Energy sector exposure (ICE BofAML US Cash Pay High Yield Constrained (BB-B) Ex-Energy Custom Index)1 the Fund trailed modestly by 24 basis points (bps).2 The Fund’s diversified credit selection provided a modest positive contribution to performance.

Market Review

  • High yield returns were negative in the first quarter, down -4.53%, as measured by the ICE BofA US High Yield Indexx due to both rising interest rates and geo-political risks which reduced risk appetites for investors. Credit spreads3 widened by 33 bps to 343 bps in the period, reflecting volatile equity markets, growing concerns about inflation and the uncertainty emanating from the Russian invasion of Ukraine. Historically, the Fund has performed well in these types of market environments but our sector allocation this quarter negatively impacted performance and was led by Energy.


  • The Fund had strong credit selection in Consumer Goods, Basic Industry and Telecommunications. Within these sectors, Del Monte Foods, GPD Cos., and Digicel respectively performed well. All three holdings exhibited defensive characteristics with high coupons and good near-term re-financing prospects.


  • The primary factors driving underperformance were the Fund’s underweight to the Energy and Leisure sectors as well as its overweights in Consumer Goods and Retail sectors. Within Leisure, our minimal exposure to cruise lines was a drag, as this sector continues to recover from pandemic-related disruptions. In Retail, our overweight to Crocs negatively impacted performance as the company underperformed after the announcement of a debt-funded acquisition. Lastly, in Healthcare, our position in Avantor’s preferred stock was a headwind to performance as the highly correlated stock performed poorly in the period.


  • The high yield market has been resilient in the face of volatile equity markets, rising interest rates and geo-political uncertainty. In part, this is due to improving debt metrics in recent quarters and interest coverage ratios being near all-time highs. With this dynamic in mind, high yield companies are in a strong position to weather any potential economic weakness, but we recognize that spreads are relatively low and therefore we continue to be somewhat cautious in our security selection. We remain focused on resilient sectors and companies that are well positioned to take advantage of the opportunities arising from the transition to a more sustainable economy.


(as of 3/31/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception*
High Yield Bond Fund - Investor Class-1.03-4.98-4.98-
High Yield Bond Fund - Class A-1.03-5.11-5.11-
High Yield Bond Fund - Institutional Class-1.02
ICE BofA Merrill Lynch US High Yield - Cash Pay - BB-B (Constrained 2%) Index-0.90
Lipper High Yield Bond Funds Index-0.53

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

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

As of 5/1/21 prospectus, total annual High Yield Bond Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Investor Class, Class A and Institutional Class shares are 0.96%, 0.96% and 0.72%, respectively.ˆ

after sales charge

(as of 3/31/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception*
High Yield Bond Fund - Class A (Load)-5.48

*The inception date for the Pax High Yield Bond Fund Institutional Class is June 1, 2004, the Investor Class inception date is October 8, 1999, 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 date (June 1, 2004). 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 June 1, 2004 is 5.65% (annualized).

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 3.43% (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 4.50%.

Performance Attribution

(as of 3/31/22)
Average Active Weights (%)
Total Relative Contribution (%)

Past performance is no guarantee of future results.

Portfolio Characteristics

(as of 3/31/22)
Effective Duration)4.044.09
Years to Maturity6.426.25
30 Day SEC Yield
Class A5.02%

1The ICE BofA US High Yield Cash Pay BB-B Ex Energy Custom Index tracks the performance of BB- and B-rated fixed income securities publicly issued in the major domestic or eurobond markets, with total index allocation to an individual issuer limited to 2%. This Index excludes securities in the Energy industry. The annualized returns for the Index as of 3/31/2022 were QTD: -4.85%, 1 year: -1.47%, 5 year: 4.49%, 10 year: 4.64%.

2Basis points, otherwise known as bps, is a unit of measure to describe the percentage change in the value of financial instruments or the rate change in an index or other benchmark. One basis point is equivalent to 0.01% (1/100th of a percent) or 0.0001 in decimal form.

3Credit spread is the difference between the yield (return) of two different debt instruments with the same maturity but different credit ratings. In other words, the spread is the difference in returns due to different credit qualities.

Top 10 Holdings

(as of 3/31/22)

Cco Holdings LLC, 4.750%, 3/1/30 0.9%, Prime Security Services Borrower LLC, 6.25%, 1/15/28 0.9%, Centene Corp., 4.625%, 12/15/29 0.8%, Avantor Funding, Inc., 4.625%, 7/15/28 0.7% Nmg Holding Co., Inc., 7.125%, 4/1/26 0.7%, Mileage Plus Holdings LLC, 06/20/27 0.7%, Ardagh Packaging Finance PLC, 5.25%, 8/15/27 0.7%, Altice France Holding Sa, 10.5%, 5/15/27 0.7%, Ncr Corp., 5.125%, 4/15/29 0.6% and Nielsen Finance LLC, 5.625% 10/1/2028 0.6%. Holdings are subject to change.


xThe ICE BofA Merrill Lynch High Yield Index tracks the performance of below investment grade, but not in default, US dollar denominated corporate bonds publicly issued in the US domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody’s and S&P. One cannot invest directly in an index.

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.

IMPX1050 (7/22)

Peter Schwab, CFA®

Senior Portfolio Manager

Peter Schwab 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 High Yield Bond Strategy, which includes the Pax High Yield Bond Fund. Peter is also a member of the Pax Sustainable Allocation Fund portfolio management team.

Prior to joining the firm in 2015, Peter was a Managing Director on the High Yield Bond and Loan Team at Goldman Sachs Asset Management. Prior to that he was an Investment Associate in the High Yield Group at Putnam Investments and a member of the High Yield Research Group at Donaldson, Lufkin and Jenrette.

Peter has a Bachelor of Arts in history and economics from Union College and an MBA in finance from Columbia Business School. He is a CFA® charterholder, a member of the New York Society of Security Analysts and holds the FINRA Series 7 and 63 registrations.

Peter Schwab is a registered representative of Foreside Financial Services, LLC.

Recent Insights

Kent Siefers

Portfolio Manager

Kent Siefers is a Portfolio Manager of the High Yield Bond Strategy, which includes the Pax High Yield Bond Fund.

Before joining Impax in 2009, Kent was an analyst at LKS Capital LLC, where he worked on an event-driven hedge fund. Prior to that he was Director of Research and Co-portfolio manager of a convertible arbitrage hedge fund at PRS Group International. He started his career as a research associate working for investment firms such as Thomas Weisel Partners, BankBoston Robertson Stephens and Federated Investors.

Kent received a Bachelor of Science in business administration from the University of Vermont. He is a member of the Boston Security Analysts Society.

Recent Insights

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