Performance and Portfolio Update
- The Pax MSCI EAFE ESG Leaders Index Fund trailed the MSCI EAFE Index (EAFE Index) in the first quarter of 2019.
- In the first quarter, developed market equities rebounded from the down market in the previous quarter and posted a 9.98% return, as measured by the EAFE Index.Δ
- Investing in international developed market companies demonstrating strong ESG characteristics is the Fund’s strategy for delivering long-term investment performance. On a short-term basis, other factors can negatively affect returns and mitigate the impact of the stronger ESG profile companies, which was the case in the first quarter. A chart showing performance attribution by ESG ratings over the trailing three months and since the Fund’s inception is available below. The highest-rated ESG companies and the average-rated groups detracted the most during the quarter. Longer-term, since the Fund’s inception, an overweight to the highest-rated ESG companies has contributed the most to relative performance.△△
- In the first quarter, almost 80% of the Fund’s relative underperformance compared to the EAFE Index can be attributed to EAFE Index stocks not held in the Fund, since they did not meet minimum ESG thresholds to become a constituent of the Fund’s underlying MSCI EAFE ESG Leaders Index.
- From a sector perspective, Consumer Staples detracted the most from relative return, led by selections and underweight allocations to the Food Products and Beverages industries. In addition, selections in Telecommunications within the Communication Services sector and a large underweight to Metals & Mining, a top performing industry, detracted from relative return during the quarter.
- Conversely, stock selection and an overweight allocation in Information Technology, led by Electronic Equipment Instruments & Components and Semiconductors, added the most to relative return in the quarter. In addition, stock selection in Pharmaceuticals, Health Care Equipment & Supplies and Capital Markets helped performance during the quarter.
- On a regional basis, the European and Pacific regions detracted from relative performance versus the EAFE Index. Within Europe, companies with leading ESG profiles in France, UK and Sweden underperformed. In the Pacific region, holdings in Australia and Hong Kong detracted from relative performance.
Performance(as of 3/31/19)
|Returns (%)||Average Annual Returns (%)|
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Pax MSCI EAFE ESG Leaders Index Fund - Investor Class||0.70||9.06||9.06||-4.26||5.86||1.56||-||3.80|
|Pax MSCI EAFE ESG Leaders Index Fund - Institutional Class||0.71||8.97||8.97||-4.15||6.08||1.78||-||4.05|
|MSCI EAFE ESG Leaders (Net) Index||0.45||9.30||9.30||-3.69||6.29||2.49||-||4.51|
|MSCI EAFE (Net) Index||0.63||9.98||9.98||-3.71||7.27||2.33||-||4.03|
|Lipper International Large-Cap Core Funds Index||-0.14||9.49||9.49||-6.62||6.71||1.83||-||3.46|
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 paxstaging.wpengine.com
Figures include reinvested dividends, capital gains distributions and changes in principal value.
1The inception date for the Pax MSCI EAFE ESG Leaders Index Fund Institutional Class is January 27, 2011, and the Investor Class inception date is March 31, 2014.
As of 5/1/18 prospectus, total annual Pax MSCI EAFE ESG Leaders Index Fund operating expenses, gross of any fee waivers or reimbursements, for Investor Class and Institutional Class shares are 0.80% and 0.55%, respectively.
ESG Ratings(as of 3/31/19)
Average Active Weights (%)
|3-month Relative Contribution (%)||Since Inception 1/27/11
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 3/31/19)
|Market Cap (weighted avg.)∱||$49,935M||$62,643M|
|Number of Securities||372||919|
Top 10 Holdings
(as of 3/31/19)
Roche Holding AG 2.7%, Total SA 2.0%, GlaxoSmithKline PLC 1.9%, SAP SE 1.6%, Novo Nordisk A/S, Class B 1.5%, Allianz SE 1.4%, Unilever NV 1.4%, Commonwealth Bank of Australia 1.3%, Siemens AG 1.1% and ASML Holding NV 1.1%. Holdings are subject to change.
ΔMSCI EAFE Index quarterly returns: Q1-19: 9.98%, Q4-18: -12.54%, Q3-18: 1.35%, Q2-18: -1.07%, Q1-18:-1.70%, Q4-17: 4.23%, Q3-17: 5.40%, Q2-17: 6.12%, Q1:17: 7.25%, Q4-16: -0.71%, Q3-16: 6.43%, Q2-16: -1.46% and Q1-16:-3.01%.
△△MSCI ESG Research evaluates companies’ ESG characteristics and derives corresponding ESG scores and ratings. Companies are ranked by ESG score against their sector peers to determine their eligibility for the MSCI ESG indices. MSCI ESG Research identifies the highest-rated companies in each peer group to meet the float-adjusted market capitalization sector targets. The rating system is based on general and industry-specific ESG criteria, assigning ratings on a seven-point scale from AAA (highest) to CCC (lowest).
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 corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
∞A historical Beta is used for funds with greater than two years of performance history under the same mandate. Three year Beta is used. Beta reflects the sensitivity of a fund’s return to fluctuations in its benchmark; a beta for a benchmark is 1.00: A beta greater than 1.00 indicates above-average volatility and risk.
On 3/31/2014 Pax International Fund and Pax MSCI EAFE ESG Index ETF merged into the Pax MSCI International ESG Index Fund (the Fund), a passively managed index fund which seeks investment returns that closely correspond to the price and yield performance, before fees and expenses, of the MSCI EAFE ESG Index. Based on the similarity of the Fund to Pax MSCI EAFE ESG Index ETF, Pax MSCI EAFE ESG Index ETF (the Predecessor Fund) is treated as the survivor of the mergers for accounting and performance reporting purposes. Accordingly, all performance and other information shown for the Fund for periods prior to 3/31/2014 is that of the Predecessor Fund.
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.