Performance and Portfolio Update
- The Pax Large Cap Fund outperformed the S&P 500 Index during the first quarter of 2021. Performance relative to the benchmark was driven by positive stock selection, partially offset by negative sector allocation during the quarter.
- Over the three-year period ending March 31, 2021, the Fund’s institutional class has outperformed the S&P 500 Index and ranks in the top 2% (9 out of 1,225) Morningstar Large Blend peers.1 Also, the Fund has earned a 5-Star Overall Morningstar Rating based on risk-adjusted returns in the Large Blend category (1,225) peers.2
- During the first quarter, the Fund experienced very strong relative performance from three sectors: Information Technology, Communications Services, and Consumer Discretionary. Outperformance in the Information Technology sector was driven primarily by exposure to semiconductor equipment maker Applied Materials and network security solutions provider Fortinet. ViacomCBS was a primary driver of outperformance in the Communication Services sector, as the launch of their Paramount+ offering boosted investor sentiment. Outperformance in the Consumer Discretionary sector was driven by exposure to Lowe’s and flooring manufacturer Mohawk Industries, which are expected to benefit from momentum in home-improvement spending.
- The Fund’s most significant sector detractors were Energy and Industrials. The Fund is fossil-fuel free, so the lack of exposure to the Energy sector (up 31.03%) was a drag on relative performance during the quarter. Within Industrials, long-time holding Trane Technologies continued to perform well (up 14.49%), however, the Fund’s holding in UPS significantly lagged the market and sector peers during the period. Overall, the Fund did not have enough exposure to industrial companies levered to a further reopening of the economy to generate outperformance in this strong-performing sector.
- The market environment was quite favorable for stocks in the first quarter, as the S&P 500 Index returned 6.17%, but under the surface a clear rotation from “growth” sectors to “value” sectors gained momentum. Energy, Financials, and Industrials led the market sectors during the first quarter, as investors grew more confident in the strength of the economy for the rest of 2021.
- The Biden administration’s focus on moving past the COVID crisis and investing in infrastructure has been viewed favorably by the equity markets. This is especially true for sustainable investors due to the emphasis of Biden’s proposed infrastructure plan on addressing climate change and inequalities. We remain focused on both sustainability “megatrends” that should shape the investment landscape for decades to come and bottom-up analysis of securities that have company-specific investment drivers. We continue to emphasize companies that have durable business models with growth and valuation drivers. We believe our investment approach, which seamlessly integrates fundamental and sustainability analysis, will serve as a “flywheel” to drive performance over time as investors focus on the opportunities and risks arising from the transition to a more sustainable economy.
Performance(as of 3/31/21)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception3|
|Pax Large Cap Fund - Investor Class||4.54||9.23||9.23||65.47||19.87||-||-||18.50|
|Pax Large Cap Fund - Institutional Class||4.60||9.38||9.38||65.93||20.21||-||-||18.81|
|S&P 500 Index||4.38||6.17||6.17||56.35||16.78||-||-||16.29|
|Lipper Large-Cap Core Funds Index||4.19||6.65||6.65||55.87||15.33||-||-||14.94|
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. For most recent month-end performance information call 800.767.1729 or visit impaxam.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
3The inception date for the Pax Large Cap Fund Institutional Class and the Investor Class is December 16, 2016.
As of 5/1/2020 prospectus, total annual Pax Large Cap Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Investor Class and Institutional Class shares are 0.95% and 0.70%, respectively.
(12/31/20 - 3/31/21)
Sector: Average Active Weights (%)
|Total Relative Contribution (%)|
XOther: ETFs (for short-term cash mgmt. purposes) and Cash & Equivalents.
Past performance is no guarantee of future results. Short term performance may not be indicative of long term results.
Portfolio Characteristics(as of 3/31/21)
|Market Cap (weighted avg.)∱||$397,645M||$468,369M|
|Number of Securities||48||504|
1 Data shown represent rankings for the Pax Large Cap Fund – Institutional Class (PXWIX) in the Morningstar Large Blend category based on average annual returns. Morningstar percentile rank is a standardized way of ranking items within a peer group, in this case, funds with the same Morningstar Category. The observation with the largest numerical value is ranked one; the observation with the smallest numerical value is ranked 100. The remaining observations are placed equal distance from one another on the rating scale. Note that lower percentile ranks are generally more favorable for returns (high returns), while higher percentile ranks are generally more favorable for risk measures (low risk). The Pax Large Cap Fund – Institutional Class (PXLIX) 1-year 12th percentile rank (135 out of 1351 funds), 3-year 2nd percentile rank (9 out of 1225 funds). The Pax Large Cap Fund – Investor Class (PAXLX) 1-year 14th percentile rank (151 out of 1351 funds), 3-year 2rd percentile rank (12 out of 1225 funds).
2 The Morningstar Ratings™ shown are as of 3/31/21. The Morningstar Rating for funds, or “star rating,” is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five- and ten- year (if applicable) Morningstar Rating metrics. The weights are 100% three-year rating for 36-59 months of total returns, 60% five-year rating, 40% three-year rating for 60-119 months of total returns, and 50% ten-year rating, 30% five-year rating, 20% three-year rating for 120 or more months of total returns. While the ten-year overall rating formula seems to give the most weight to the ten-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Pax Large Cap Fund Investor Class (PAXLX) Morningstar ratings were 5 stars out of 1225 funds overall, 5 stars out of 1225 funds for 3-years. Pax Large Cap Fund Institutional Class (PXLIX) Morningstar ratings were 5 stars out of 1225 funds overall, 5 stars out of 1225 funds for 3-years.
Top 10 Holdings
(as of 3/31/21)
Microsoft Corp. 5.7%, Apple, Inc. 3.9%, Applied Materials, Inc. 3.2%, Amazon.com, Inc. 3.1%, Procter & Gamble Co., The 3.0%, United Parcel Service, Inc., Class B 2.9%, Alphabet, Inc., Class A 2.9%, Bristol-Myers Squibb Co. 2.7%, Voya Financial, Inc. 2.7% and T-Mobile US, Inc. 2.7%. Holdings are subject to change.
ƒWeighted Average is an average in which each quantity to be averaged is assigned a weight. These weightings determine the relative importance of each quantity on the average.
∼Forward Price-Earnings Ratio or P/E FY1 ratio is a ratio for valuing a company that measures its current share price relative to its per-share earnings over the next 12 months.
∘ Return on Equity: The amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporations’ profitability by revealing how much profit a company generates with the money shareholders have invested.
∞The Ex-Ante Beta is calculated using a multi-factor risk model. Beta explains common variations in stock returns due to different stock sensitivities to the market relative to its underlying benchmark for the current period, not historical. A beta for a benchmark is 1.00: A beta greater than 1.00 indicates above average volatility and risk.
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.