Performance and Portfolio Update

  • The Fund outperformed the S&P 500 Index during the fourth quarter of 2019. Consistent with the Fund’s bottom-up investment approach and typical performance attribution, performance relative to the benchmark was driven by stock selection, which was positive in the quarter, and not by sector allocation, which was neutral.
  • During the quarter, the Fund reached its three-year anniversary. Over the three-year period ending December 31, 2019, the Fund’s institutional class has outperformed the S&P 500 Index and ranks in the top 8% out of 1,203 Morningstar Large Blend peers.1 Also, the Fund has earned a 4-Star Overall Morningstar Rating based on risk-adjusted returns in the Large Blend category (1,203 peers).2 2019 was an especially strong year of performance with the Fund’s institutional class ranking in the top 4% out of 1,387 Morningstar Large Blend peers and ending the year with three consecutive quarters of outperforming the S&P 500 Index.3 We are excited for the opportunity to build on this solid foundation of performance in the future.
  • Turning to Fund attribution during the fourth quarter, we saw very positive relative performance from the Health Care and Consumer Discretionary sectors during the quarter. In Health Care, HMOs Humana (up 44%) and Cigna (up 36%) benefitted from strong earnings growth and perceived lessening of political risk during the 2020 election cycle. Bristol-Myers Squibb (up 28%) closed its acquisition of Celgene and divested the legacy Celgene drug Otezla for an attractive price. New holding Vertex Pharmaceuticals (up 31%) received earlier than expected approval for its combination cystic fibrosis therapy. Biogen (up 31%) announced it was advancing its Alzheimer’s drug for FDA approval. Within Consumer Discretionary, Target (up 22%) announced a second consecutive strong quarter of earnings, as capital spent in prior years has led to strong revenue growth amid a difficult retail backdrop.
  • The Fund’s worst performing sector was Materials, driven by Vulcan Materials (down -3%) and DuPont (down -5%). Vulcan slightly missed earnings estimates on elevated expenses. DuPont announced a combination of its Nutrition and Biosciences business with International Flavors and Fragrances (IFF), amid a weak backdrop for a number of its product lines.
  • During the quarter, the S&P 500 increased by 9.07% to cap off a very strong year for US equities. Despite earnings growth that hovered close to zero, tailwinds to stock performance included easing global trade tensions and continued monetary accommodation by the Federal Reserve.
  • We do not expect 2020 performance for large cap stocks to be nearly as strong as 2019. While we continue to find attractive investment ideas across multiple sectors, valuations have crept up throughout the year, so there are fewer inexpensive stocks in our investment universe. If the US experiences a material slowdown in economic growth or elevated political uncertainty during 2020, we would expect a volatile year for the market.
  • We remain focused on bottom-up stock selection, emphasizing companies that have durable business models with growth and valuation drivers. We believe our investment approach, which seamlessly integrates fundamental and ESG 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.


(as of 12/31/19)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception4
Large Cap Fund - Investor Class3.3510.3934.8534.8515.6--15.08
Large Cap Fund - Institutional Class3.4610.4935.2335.2315.90--15.37
S&P 500 Index3.029.0731.4931.4915.27--14.75
Lipper Large-Cap Core Funds Index2.788.7228.7928.7913.89--13.39

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

Figures include reinvested dividends, capital gains distributions, and changes in principal value.

4The inception date for the Pax Large Cap Fund Institutional Class and the Investor Class is December 16, 2016.

As of 5/1/19 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 0.96% and 0.70%, respectively.

Performance Attribution

(as of 12/31/19)
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.

Portfolio Characteristics

(as of 12/31/19)
Market Cap (weighted avg.)$319,662M$291,342M
Forward Price/Earnings19.6319.97
Number of Securities45504


1, 3 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 (PXWIX) 1-year 4th percentile rank (38 out of 1387 funds), 3-year 8th percentile rank (79 out of 1203 funds). The Pax Large Cap Fund – Investor Class (PAXLX) 1-year 5th percentile rank (50 out of 1387 funds), 3-year 12th percentile rank (120 out of 1203 funds).

2 The Morningstar Ratings™ shown are as of 12/31/19. 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 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.

The Pax Large Cap Fund (PXLIX) Morningstar ratings were 4 stars out of 1,203 funds overall, 4 stars out of 1,203 funds for 3-years. Ratings are subject to change every month.

Top 10 Holdings

(as of 12/31/19)
Apple, Inc. 5.4%, Microsoft Corp. 5.4%,, Inc. 3.6%, Procter & Gamble Co., The 3.5%, Merck & Co., Inc. 3.5%, JPMorgan Chase & Co. 3.2%, Ingersoll-Rand PLC 2.9%, AT&T, Inc. 2.9%, Alphabet, Inc., Class C 2.7% and Alphabet, Inc., Class A 2.7%. Holdings are subject to change.


The S&P 500 Stock Index is an unmanaged index of large capitalization common stocks. One cannot invest directly in any index.
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.
An Ex-Ante Beta is used for Funds with less than 2 years of performance history under its new mandate. 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.

PAX009034 (4/20)


Andrew Braun, Pax World Funds

Andrew Braun

Senior Portfolio Manager

Andrew Braun is 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 US Large Cap Strategy, which includes the Pax Large Cap Fund. He is also a member of the Pax Sustainable Allocation Fund portfolio management team.

Prior to joining the firm in 2017, Andy was Managing Director on the value equity team at Goldman Sachs Asset Management, where he led a team of 30 portfolio managers and analysts. Andy joined Goldman Sachs Asset Management as a Product Development Associate in 1993. He was promoted to Portfolio Manager in 2001 and served as Co-Chief Investment Officer from 2008 to 2014. Before Goldman Sachs, Andy was a Financial Analyst in the corporate finance division of Dillon, Read & Co. Inc.

Andy has a Bachelor of Arts in economics from Harvard University and a Master of Business Administration in finance and economics from the Stern School of Business at New York University.

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Barbara Browning, Pax World Funds

Barbara Browning, CFA®

Portfolio Manager

Barbara Browning is a Portfolio Manager at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

Barbara is a Portfolio Manager of the US Large Cap Strategy, which includes the Pax Large Cap Fund.

Prior to joining the firm in 2017, Barbara was Vice President and Senior Portfolio Manager at RBC Global Asset Management, Inc., where she co-managed Diversified Core, Concentrated Core and Diversified Large Cap Value Equity funds. Prior to that, Barbara was a Senior Portfolio Manager and Investment Officer at National City Bank, a Senior Research Analyst at Banc One Investment Advisors Corporation and held various equity research positions.

Barbara has a Bachelor of Arts in economics from The Ohio State University, where she graduated cum laude. She is also a CFA® charterholder.

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