Performance and Portfolio Update

  • The Pax High Yield Bond Fund Institutional class underperformed its benchmark by 30 basis points in the quarter. Adverse credit selection in the Retail and Telecommunication sectors drove the majority of the underperformance. Conversely, strong credit selection in the Energy and Media sectors helped performance during the quarter.
  • The recent strength in the high yield market continued in the 3rd quarter with a total return of 2.04% as represented by BofA Merrill Lynch US High Yield – Cash Pay (Constrained 2%) Index, resulting in a total return year-to-date of 7.07%. Stable economic indicators, moderate inflation, low default activity and modest supply have all contributed to the favorable high yield market environment. The Fund’s performance in the quarter is consistent with our expectations during strong market conditions.
  • After nearly two years of strong performance, we are approaching historically low spreads in the high yield market. While the economic backdrop remains supportive for the asset class, a number of geopolitical risks are present and the potential for monetary tightening could cause investors to reduce their risk-taking appetite. As such, we are becoming more defensive and taking steps to reduce risk in the portfolio on the margin.
  • New issuance continues to be active in the market and driven primarily by benign re-financing activity. Conversely, more aggressive merger and acquisition and leveraged buy-out (LBO) activity has been limited. Trading liquidity remains adequate but we remain focused on minimizing turnover and careful credit selection.


(as of 9/30/17)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
High Yield Bond Fund - Individual Investor Class1.151.576.148.932.934.295.375.55
High Yield Bond Fund - Class A˜1.001.576.148.932.934.315.385.55
High Yield Bond Fund - Institutional Classƒ1.021.646.359.063.134.545.625.73
BofA Merrill Lynch US High Yield - Cash Pay - BB-B (Constrained 2%) Index0.781.946.577.915.796.147.25
Lipper High Yield Bond Funds Index0.842.076.888.904.865.776.28

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 5/1/17 prospectus, total annual High Yield Bond Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Individual Investor Class, Class A, and Institutional Class shares are 0.99%, 0.98% and 0.74%, respectively.

1The inception date for the Pax High Yield Bond Fund Institutional Class is June 1, 2004, the Individual 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 Individual 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 6.34% (annualized).

The performance information shown for Class A represents the performance of the Individual 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 3.32% (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%.

after sales charge

(as of 9/30/17)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
High Yield Bond Fund - Class A (Load)-3.53-2.971.324.071.373.364.905.28

Performance Attribution

(as of 9/30/17)
Total Relative Contribution (%)

Past performance is no guarantee of future results.

Portfolio Characteristics

(as of 9/30/17)
Effective Duration)3.68%3.95%
Years to Maturity6.186.46
30 Day SEC Yield
Class A4.24%


Top Ten Holdings

(as of 9/30/17)
HCA, Inc., 5.875%, 2/15/26 1.2%, Mednax, Inc., 5.250%, 12/1/23 0.8%, Sally Holdings LLC, 5.625%, 12/1/25 0.8%, Charlotte Russe, Inc., 6.750%, 05/21/19 0.8%, Care Capital Properties LP, 5.125%, 8/15/26 0.8%, Sirius XM Radio, Inc., 5.375%, 4/15/25 0.8%, Fly Leasing, Ltd., 6.375%, 10/15/21 0.8%, Ard Finance SA, 7.125%, 9/15/23 0.8%, Simmons Foods, Inc., 7.875%, 10/1/21 0.7% and Wesco Distribution, Inc., 5.375%, 6/15/24 0.7%. Holdings are subject to change.


A basis point (bps) is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.
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.

PAX007464 (1/18)

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.

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