• The Pax High Yield Bond Fund underperformed its benchmark, the ICE BofA BB-B Constrained Index, in the second quarter of 2022. While sector allocation was positive overall, the lack of Energy sector exposure diluted this measure and negative credit selection was the primary driver of the underperformance. Relative to the ICE BofA US High Yield Cash Pay BB-B Ex Energy Index1, the fund also underperformed due to negative credit selection.

Market Review

  • High Yield returns were negative in the second quarter. Growing concern about the ability of the Fed to rein in inflation and concerns about a slowing economy sharply reduced risk appetites. Spreads widened by almost 300 basis points2 in the period, reflecting volatile equity markets and growing concerns about the re-financing ability of highly indebted companies. Typically, the Fund performs well in these environments, but lack of exposure to the outperforming commodity-related sectors and a handful poor performing companies constrained performance during the period.


  • The Fund has strong credit selection in the Consumer Goods, Transportation and Financial Services sectors. Specific companies that were additive to performance included USG (bonds were called), Avantor (organic growth continues) and Meritor (acquired by Cummins).


  • The primary factors driving underperformance were the Fund’s underweight to the Energy sector and negative credit selection in the Media, Technology and Services sectors. Specifically, a number of lower rated (CCC) credits detracted in the period as this part of the market materially underperformed. Diebold, an ATM machine manufacturer, was a significant drag as the company is facing operational headwinds and has a near term maturity which is putting additional pressure on the company. Endo International, a pharmaceutical company, also underperformed as they are facing new competition for several of their drugs. Lastly, LBM Acquisition, a building materials distributor, detracted as the bonds are deeply subordinated in this highly indebted capital structure.


  • The High Yield market has been weak so far in 2022, delivering losses that are near record levels for any measurement period. With an uncertain outlook for inflation and the economy, it is likely that risk assets will continue to be volatile in the near term. The weakness in bond prices has given rise to several potential opportunities, namely much higher yields and deep discounts for many viable companies. The asset class is now able to deliver sufficiently high current income to help offset fluctuations in spreads and interest rates. The Portfolio Managers are actively re-positioning into higher conviction names that they believe will weather economic weakness and remain focused on sectors that are well positioned for the transition to a more sustainable global economy.


(as of 6/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception*
High Yield Bond Fund - Investor Class-6.76-10.70-15.14-14.28-0.561.183.014.53
High Yield Bond Fund - Class A-6.73-10.52-15.09-14.23-0.491.223.044.55
High Yield Bond Fund - Institutional Class-6.76
ICE BofA Merrill Lynch US High Yield - Cash Pay - BB-B (Constrained 2%) Index-6.76
Lipper High Yield Bond Funds Index-6.44

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 5/1/22 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 0.93%, 0.93% and 0.69%, respectively.ˆ

after sales charge

(as of 6/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception*
High Yield Bond Fund - Class A (Load)-10.91

*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 4.92% (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 2.09% (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 6/30/22)
Average Active Weights (%)
Total Relative Contribution (%)

Past performance is no guarantee of future results.

Portfolio Characteristics

(as of 6/30/22)
Effective Duration)4.424.40
Years to Maturity6.166.04
30 Day SEC Yield
Class A7.11%

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 6/30/2022 were QTD: -9.70%, 1 year: -12.87%, 5 year: 2.01%.

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.

Top 10 Holdings

(as of 6/30/22)

Cco Holdings LLC, 4.750%, 3/1/30 1.2%, Vici Properties Lp 4.625% 01-dec-2029 1.0%, Centene Corp., 4.625%, 12/15/29 1.0%, Prime Security Services Borrower LLC, 6.25%, 1/15/28 1.0%, Avantor Funding, Inc., 4.625%, 7/15/28 0.9%, Mileage Plus Holdings LLC, 06/20/27 0.8%, Iron Mountain Incorporated 4.875% 15-sep-2029 0.7%, Graphic Packaging International, Llc 3.75% 01-feb-2030 0.7%, Ncr Corp., 5.125%, 4/15/29 0.7% and Standard Industries, Inc., 5.0%, 2/15/27 0.7%. 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.

IMPX1154 (10/22)

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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