Performance and Portfolio Update

  • The Pax Small Cap Fund underperformed the Russell 2000 Index in the second quarter. Portfolio holdings within Financials, Energy and Consumer Discretionary were key detractors to performance.
  • The Russell 2000 Index outperformed the S&P 500 Index during the quarter as investors sought out the relative safety of small-cap companies’ domestic exposure during a period of rising trade tensions. In fact, micro-cap companies (the smallest of the small) as represented by the Russell Microcap Index outperformed the Russell 2000 Index by 2.22%.
  • The Financials sector was the largest detractor to performance during the period. Our holding in Investors Bancorp declined -5.6%, despite better than expected first quarter earnings. The bank continues to be restricted from mergers and acquisitions and is incurring elevated expenses due to on-going regulatory scrutiny. In addition, rising deposit costs are pressuring margins.
  • The Fund benefited from strong stock selection in the Technology and Industrials sectors. Within Technology, our holding in Group increased 42.8% during the period. Despite weak earnings, the company rallied initially on the involvement of an activist investor and later the proposed sale of the company to a private equity firm.
  • Small-cap companies as a whole acted defensively in the second quarter due to the combination of an accelerating US economy and their relative immunity to rising trade tensions. Despite some episodic volatility and hand wringing in the financial media, the broader market was up nicely during the quarter. In our view, this reflects the belief by investors that trade rhetoric is just part of the negotiation. That may be true, but we are more cautious than the current sentiment of market participants. If tensions escalate, we expect significant volatility as the combination of slower growth and higher inflation will not be kind to equity multiples.


(as of 6/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Investor Class2.404.451.529.806.389.7410.099.54
Small Cap Fund - Class A˜2.404.531.539.826.399.7510.099.54
Small Cap Fund - Institutional Class2.384.541.6310.126.6510.0210.389.83
Russell 2000 Index0.727.757.6617.5710.9612.4610.6010.31
Lipper Small-Cap Core Funds Index0.606.015.2715.4510.7511.7510.0510.00

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 information visit

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

As of 5/1/18 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 1.19%, 1.19% and 0.95%, respectively.

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 11.03% (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%.

after sales charge

(as of 6/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-3.26-1.25-4.043.814.418.519.478.94

Performance Attribution

(as of 6/30/18)
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 6/30/18)
Market Cap (weighted avg.)$3,016M$2,246M
Forward Price/Earnings17.8317.47
Number of Securities542,020


Top Ten Holdings

(as of 6/30/18)
Natus Medical, Inc. 3.8%, MRC Global, Inc. 3.5%, Home Trust Bancshares, Inc. 3.4%, Antero Resources Corp. 3.3%, Unitil Corp. 3.3%, Capitol Federal Financial, Inc. 2.9%, Ligand Pharmaceuticals, Inc. 2.6%, KLX, Inc. 2.5%, Valvoline, Inc. 2.5% and Beacon Roofing Supply, Inc. 2.5%. 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..
The Russell Microcap Index is a capitalization-weighted index of almost 1,550 small cap and micro cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller US-based listed stocks. One cannot invest directly in an 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 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. 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.

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.

PAX008015 (10/18)

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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