Performance and Portfolio Update

  • The Pax Small Cap Fund outperformed the Russell 2000 Index during the first quarter. Overall, Fund performance was driven by strong stock selection with a modest offset from sector allocation.
  • Small cap stocks continued their run of strong performance with a 12.69% return stemming from the potential for accelerating economic growth. The US vaccine rollout has gone well, increasing investor confidence in the economic re-opening thesis. As a result, we witnessed a sharp rotation out of growth stocks into more cyclically positioned value companies, as they are most levered to economic growth.
  • From an attribution perspective, Healthcare was our best performing sector. Both strong stock selection and an underweight allocation contributed to relative performance. Ligand Pharmaceuticals, a diversified biotechnology company, was our top contributor, advancing 53% during the quarter. Due in large part to growth from their Captisol drug, Ligand reported very strong quarterly results and raised annual financial guidance.
  • The Consumer Discretionary sector detracted from Fund performance. During the quarter, the sector was a focus of retail investor speculation. GameStop, the videogame retailer, increased 908% and negatively impacted the Fund’s performance relative to the benchmark because we do not own shares. There were several other low-quality companies not owned by the Fund that advanced significantly in this sector. In terms of Fund holdings, our investment in baby and children’s clothes retailer, Carter’s Inc, declined -5% during the period. The company continues to be negatively impacted by COVID-related restrictions, missing fourth quarter earnings and meaningfully lowering guidance.
  • We believe small cap stocks continue to be well-positioned as economic growth accelerates. In our view, the combination of pent-up consumer demand, accommodative monetary policy and extraordinary fiscal stimulus has set the stage for the fastest economic growth in decades. The rapid pace of vaccinations, the re-hiring of those unemployed, surging home values and record stock levels reinforces this positivity. We can debate how much of this is reflected in valuations and whether there will be a price to pay for all this stimulus, but for now, the weight of the evidence supports our bullish stance. We view bouts of volatility as opportunities to deploy capital.


(as of 3/31/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund – Investor Class1.8713.6913.6979.5910.6910.349.869.63
Small Cap Fund – Class A1.8813.7313.7379.6310.7010.339.869.63
Small Cap Fund – Institutional Class1.9013.7613.7680.0910.9710.6110.149.91
Russell 2000 Index1.0012.7012.7094.8514.7616.3511.6810.89
Lipper Small-Cap Core Funds Index3.0815.7015.7090.3912.6514.3210.7910.30

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 call 800.767.1729 or for more information visit

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

As of 5/1/20 prospectus, total annual Small Cap Fund operating expenses, gross of any fee waivers or reimbursements, for Investor Class, Class A, and Institutional Class shares are 1.20%, 1.20% and 0.95%, respectively.

after sales charge

(as of 3/31/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-3.717.457.4569.788.639.099.249.16

1The inception date for the Pax Small Cap Fund Institutional Class and Investor Class is March 27, 2008. The inception date for the Class A shares is May 1, 2013.

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 10.66% (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 5.50%.

Performance Attribution

(as of 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.

Portfolio Characteristics

(as of 3/31/21)
Market Cap (weighted avg.)$3,837M$3,606M
Forward Price/Earnings18.5819.02
Number of Securities642,056

Top Ten Holdings

(as of 3/31/21)
Victory Capital Holdings, Inc., Class A 4.8%, HomeTrust Bancshares, Inc. 4.2%, Meridian Bancorp, Inc. 3.6%, Voya Financial, Inc. 2.5%, Vertiv Holdings Co. Class A 2.3%, Ligand Pharmaceuticals, Inc. 2.3%, White Mountains Insurance Group, Ltd. 2.2%, Natus Medical, Inc. 2.1%, AZEK Company, Inc., Class A 2.1% and MRC Global, Inc. 2.0%. 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 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 2 years of performance history under the same mandate. Ten-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.

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.

IMPX0342 (7/21)

Nathan Moser, CFA®

Senior Portfolio Manager

Nathan Moser 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 Senior Portfolio Manager of the US Small Cap Strategy, including the Pax Small Cap Fund. Nathan has been a member of the Pax Sustainable Allocation Fund portfolio management team since 2015.

Nathan has managed the Pax Small Cap Fund since its inception in 2008, which is the year he joined the firm. Prior to that, he worked at Citizens Funds, first as an Equity Analyst then as a Portfolio Manager. Nathan started his career with John Hancock Funds, where he was an Equity Analyst.

Nathan holds a Bachelor of Science from Babson College. He is a CFA® charterholder and a member of the CFA Society Boston.

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