Performance and Portfolio Update

  • The Pax High Yield Bond Fund modestly underperformed its benchmark index in the third quarter. The Fund is fossil fuel free and the portfolio’s lack of exposure to Energy was a modest drag in this period and offset positive contributions in the Leisure and Healthcare sectors. In aggregate, the Fund benefited from positive credit selection, but this was offset by sector allocation, primarily due to an underweight in Energy and an overweight in Media.
  • After a strong first half of the year, high yield asset class returns moderated in the third quarter. Credit spreads widened modestly due to concerns about the COVID variant which led to heightened volatility in the equity markets. Interest rates fluctuated during the period but did not materially change and ultimately did not meaningfully impact the Fund’s performance. We continue to manage the Fund’s duration to be generally in-line with its benchmark.
  • The primary factors driving underperformance were the Fund’s underweight to the Energy sector and an overweight to the more conservative Media sector. Offsetting the negative attribution from sector allocation, was strong credit selection in the Media, Healthcare and Utility sectors.
  • Specific issuers that contributed to relative performance were Avantor, CVR Partners and Albertsons. Not owning Talen Energy also contributed positively to performance. Positions detracting from relative performance included Akumin, Ford and Altice France as well as not owning Occidental Petroleum.
  • The Fund continues to seek opportunities in high impact labeled securities and we are pleased that a growing number of high yield issuers are participating in this area. In the third quarter, we added a green bond to the portfolio issued by Sunnova, who is one of the largest providers of solar systems in the US. We believe this fast-growing company will perform well and likely access the debt markets on a regular basis as they move forward with their growth plans.
  • We are optimistic that sufficient pricing power is available for corporate earnings to remain strong despite supply chain disruptions and higher input costs. This backdrop will support credit spreads1 in the near-term, however, we are aware that credit spreads are narrow, and we are closely monitoring the factors that could negatively impact credit spreads. We remain focused on resilient companies with manageable debt loads and have become more cautious as the post-COVID economic recovery remains uncertain.


(as of 9/30/21)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
High Yield Bond Fund - Investor Class-0.120.652.587.446.455.955.625.46
High Yield Bond Fund - Class A0.020.652.737.596.455.985.645.47
High Yield Bond Fund - Institutional Class0.04
ICE BofA Merrill Lynch US High Yield - Cash Pay - BB-B (Constrained 2%) Index-0.04
Lipper High Yield Bond Funds Index0.12

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 9/30/21)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
High Yield Bond Fund - Class A (Load)-4.49

2The 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 6.11% (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 4.24% (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 9/30/21)
Average Active Weights (%)
Total Relative Contribution (%)

Past performance is no guarantee of future results.

Portfolio Characteristics

(as of 9/30/21)
Effective Duration)3.924.30
Years to Maturity6.766.90
30 Day SEC Yield
Class A2.86%

1Credit 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 9/30/21)
Cco Holdings LLC, 4.750%, 3/1/30 1.1%, Sunnova Energy Corp, 5.875%, 9/1/2026 1.0%, Avantor Funding, Inc., 4.625%, 7/15/28 1.0%, Kraft Heinz Foods Co., 4.375%, 6/1/46 0.9%, Centene Corp., 4.625%, 12/15/29 0.8%, Standard Industries, Inc., 5.0%, 2/15/27 0.8%, Prime Security Services Borrower LLC, 6.25%, 1/15/28 0.7%, Univar Solutions, Inc., 5.125%, 12/1/27 0.6%, Nmg Holding Co., Inc., 7.125%, 4/1/26 0.6% and Iqvia, Inc., 5.0%, 5/15/27 0.6%. Holdings are subject to change.


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.

IMPX0736 (1/22)

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.

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