• The Pax High Yield Bond Fund underperformed its benchmark, the ICE B of A US High Yield Index, in the third quarter.

Market Review

  • High yield returns, as measured by the ICE B of A US High Yield Index, were negative in the third quarter. Growing concerns about the ability of the US Federal Reserve (the Fed) to rein in inflation and recession fears reduced risk appetites, as the market remained stubborn for new high yield issuance. Spreads, however, did tighten from 587 basis points (bps)1 to 543 bps during the period. The Fund’s underweight to the commodity sector and overweight to CCC-rated bonds continued to be a headwind this past quarter.


  • The Fund had strong credit selection in the healthcare, retail and services sectors. Contributing companies that aided performance included an underweight exposure to Bausch Health, which performed poorly in the period, as well as an overweight to Staples, as the company delivered better than expected results and Crocs, which continued to deliver strong quarterly results. The service sector was also a positive contributor from both an overweight allocation and credit selection perspective.


  • The primary factors driving underperformance were the portfolio’s underweights to the energy and leisure sectors and negative credit selection within capital goods, real estate and technology sectors. Ardagh, a European and North American beverage packaging manufacturer underperformed amid concerns about their European exposure and higher energy input costs. Endo International, a pharmaceutical company, also underperformed amid to concerns about their liquidity profile and increased industry competition for several of their drugs. Lastly, Avantor underperformed due to concerns about slowing growth trends.


  • The ongoing uncertainty over inflation and the economic outlook have weighed heavily on the high yield market this year. We expect this to continue until there is concrete evidence that inflation is waning, and central banks ease their current restrictive policies. In this environment, the portfolio has been more cautious on companies with substantial cyclical exposure or those with more fragile capital structures. It should be noted however, that current yields have risen materially and are now approaching levels sufficient to offset further spread widening and help cushion potential default losses. We continue to re-position the strategy’s holdings into higher conviction names that the portfolio managers believe will weather any future economic weakness. We remain focused on sectors that are well positioned for the transition to a more sustainable global economy.


(as of 9/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
High Yield Bond Fund - Investor Class-4.35-1.22-16.18-15.87-1.610.612.434.43
High Yield Bond Fund - Class A-4.34-1.39-16.28-15.97-1.600.622.454.43
High Yield Bond Fund - Institutional Class-4.34-1.17
ICE BofA Merrill Lynch US High Yield - Cash Pay - BB-B (Constrained 2%) Index-3.88-0.75-14.29-13.66-0.761.52
Lipper High Yield Bond Funds Index-3.90

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 9/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
High Yield Bond Fund - Class A (Load)-8.69

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 4.79% (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 1.88% (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 9/30/22)
Average Active Weights (%)
Total Relative Contribution (%)

Past performance is no guarantee of future results.

Portfolio Characteristics

(as of 9/30/22)
Effective Duration)4.214.25
Years to Maturity5.935.84
30 Day SEC Yield
Class A7.70%

1Basis 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 9/30/22)

Cco Holdings LLC, 4.750%, 3/1/30 1.2%, Centene Corp., 4.625%, 12/15/29 1.1%, Vici Properties Lp 4.625% 01-dec-2029 1.0%, Prime Security Services Borrower LLC, 6.25%, 1/15/28 1.0%, Avantor Funding, Inc., 4.625%, 7/15/28 0.9%, Standard Industries, Inc. 4.375% 15-jul-2030 0.8%, Mileage Plus Holdings LLC, 06/20/27 0.7%, Iron Mountain Incorporated 4.875% 15-sep-2029 0.7%, Graphic Packaging International, Llc 3.75% 01-feb-2030 0.7% and Manitowoc Company, Inc., 9.0%, 4/1/26 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.

IMPX1272 (1/23)

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 and a member of the New York Society of Security Analysts.

Recent Insights

Additional 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.

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