Performance and Portfolio Update

  • The Pax Small Cap Fund trailed its benchmark during the second quarter. Strong stock selection within the Technology and Communication Services sectors was offset by disappointing results within the Financials and Consumer Discretionary sectors.
  • The Russell 2000 Index advanced more than 24% as investors grew more confident about the progression of the COVID-19 virus. The re-opening of the economy coupled with extraordinary fiscal and monetary stimuli also contributed to returns. Small cap companies as represented by the Russell 2000 Index outperformed large cap companies as represented by the Russell 1000 Index1 for the period, as investors added risk. There was also a decidedly lower quality bias in the performance results for the period, with high beta, small size and non-earners outperforming.
  • Technology was the Fund’s top performing sector for the period, due largely to the more than 300% return from Fastly, Inc. The company provides technology infrastructure that helps networks handle higher data needs. Fastly benefitted from the “stay at home” economy and we remain positive about this holding, just less so at current valuation levels. Accordingly, we trimmed the stock’s weight in the portfolio late in the period.
  • Financials was the Fund’s worst performing sector due to poor selection, specifically in banks. Hometrust Bancshares was one of the Fund’s largest detractors on investor concerns over the recession and the potential for loan losses. We continue to hold shares, finding them not only attractive from a valuation perspective, but increasingly so with respect to sustainability. Hometrust was a participant in the Payroll Protection Program (PPP), which has been an important contributor to helping small businesses survive and maintain their workforce.
  • While investors and economists continue to debate the shape of the economic recovery, the equity market appears to have voted for a V-shaped recovery in the second quarter. Despite surging unemployment, sharply lower economic growth and negative earnings revisions, small caps posted their best quarter in nearly 30 years. As a result, valuations have expanded markedly as investors seemingly look through near-term concerns and onto a brighter future. We expect the pace of the economic recovery will be driven primarily by the spread of COVID-19 and progress toward the development of therapeutics and vaccines. The near-term outlook is uncertain, and we continue to believe our high-quality approach to small cap investing is well-positioned for the current environment.


(as of 6/30/20)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
Small Cap Fund – Investor Class2.9620.81-14.52-10.24-1.361.028.876.75
Small Cap Fund – Class A2.9720.77-14.56-10.27-1.381.018.866.74
Small Cap Fund – Institutional Class3.0120.88-14.44-10.07-
Russell 2000 Index3.5325.42-12.98-6.632.014.2910.507.65
Lipper Small-Cap Core Funds Index3.0023.25-17.10-11.320.263.479.577.10

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 6/30/20)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception2
Small Cap Fund - Class A (Load)-2.7214.16-19.25-15.20-3.21-

2The 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 5.81% (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 6/30/20)
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 6/30/20)
Market Cap (weighted avg.)$2,755M$2,078M
Forward Price/Earnings16.8018.24
Number of Securities642,004

Top Ten Holdings

(as of 6/30/20)
Victory Capital Holdings, Inc., Class A 5.0%, HomeTrust Bancshares, Inc. 4.1%, Meridian Bancorp, Inc. 3.6%, Ligand Pharmaceuticals, Inc. 3.5%, Natus Medical, Inc. 3.3%, Coherus BioSciences, Inc. 3.2%, White Mountains Insurance Group, Ltd. 3.1%, Ciena Corp. 2.5%, CatchMark Timber Trust, Inc, Class A, REIT 2.3% and Flex, Ltd. 2.2%. Holdings are subject to change.


1The Russell 1000 Index measures the performance of the 1,000 largest US companies, as measured by market capitalization. It is a subset of the Russell 3000 Index, which measures the largest 3,000 companies. The Russell 1000 Index is comprised of over 90% of the total market capitalization of all listed U.S stocks.
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.

PAX009314 (10/20)

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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