Performance and Portfolio Update


  • The Pax Small Cap Fund outperformed the Russell 2000 Index during the second quarter. Fund performance was driven by a balanced combination of positive sector allocation and stock selection.

Market Review

  • Volatility has remained high in both the equity and bond markets as high inflation, rising interest rates, and supply chain disruptions saw equities deliver one of the worst quarterly returns of the past 30 years. In a challenging environment for most risk assets, small cap stocks, as measured by the Russell 2000, declined 17.2% as investors contemplated the fed tightening program and the ability of firms to navigate inflationary and supply complexities against a less certain growth environment.
  • The Fund’s institutional share class was able to outperform the benchmark, returning -16.4%, as the portfolio’s higher quality and lower risk positioning added value.


  • The largest contributor to performance was the Real Estate sector, due to strong stock selection. Two of the portfolio’s Real Estate Investment Trust holdings, Catchmark Timber and Healthcare Realty Trust, traded on M&A news. Catchmark agreed to be acquired and saw its share price rise as a result. Healthcare Realty was also the subject of takeover talks, but turned down the proposal; while that helped the stock price, there is no assurance a deal will be forthcoming. Stock selection within the Materials sector was also strong, led by Graphic Packaging. Health Care contributed positively as Natus Medical, a medical device company, was acquired by ArchiMed Group for a substantial premium.
  • Industries that the Sustainability Lens rates as “low opportunity” underperformed the market in the second quarter of 2022. The portfolio is underweight these areas of the market given their poor prospects in the transition to a more sustainable economy.


  • The largest detractor to relative performance in the period was the Industrial sector. Stock selection in this sector was challenged in the period, as securities with higher sensitivity to GDP growth struggled with sentiment shifting to a slowing economy and possible recession. Securities exposed to building materials and construction like Azek and Advanced Drainage underperformed. Financials also contributed negatively to performance this quarter because of stock selection. BrightSphere, a listed equity asset manager, saw shares move lower as the asset base from which this manager derives fee revenue fell in the equity market sell off. SuRo Capital Corp, an investor in venture stage private companies, was also weaker as private market valuations declined in Q2, leading investors to expect a lower net asset value.
  • Utilities were one of the best performing sectors in the Russell 2000 Index for the quarter, and the portfolio’s fossil-fuel-free position meant that avoiding this sector detracted from relative returns.


  • The current macro cross winds continue to create uncertainty in the short-term, resulting in declining market multiples as lower growth expectations are reflected in security prices. The portfolio managers continue to position the portfolio with a quality bias that has strong long term growth prospects. The team believes that investing in companies with attractive valuations, solid free cash flow, and better growth and returns on capital should benefit clients as the market works through this challenging period.


(as of 6/30/22)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund – Investor Class-7.99-16.50-26.14-
Small Cap Fund – Class A-8.01-16.48-26.15-
Small Cap Fund – Institutional Class-7.96-16.44-26.04-21.994.374.108.98
Russell 2000 Index-8.22-17.20-23.43-
Lipper Small-Cap Core Funds Index-8.65-14.47-19.21-16.246.306.429.918.36

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 5/1/22 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 1.15%, 1.15% and 0.90%, respectively.

after sales charge

(as of 6/30/22)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-13.06-21.08-30.19-26.452.182.678.097.06

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 7.17% (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 6/30/22)
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 6/30/22)
Market Cap (weighted avg.)$3,185M$2,523M
Forward Price/Earnings13.8911.23
Number of Securities591,991

Top Ten Holdings

(as of 6/30/22)
Victory Capital Holdings, Inc., Class A 4.0%, Healthcare Realty Trust, Inc. 3.9%, Independent Bank Corp. 3.4%, BrightSphere Investment Group, Inc. 3.1%, HomeTrust Bancshares, Inc. 3.1%, Graphic Packaging Holding Company 2.9%, Ligand Pharmaceuticals, Inc. 2.8%, Pacira Biosciences, Inc. 2.7%, Voya Financial, Inc. 2.5% and Rayonier, Inc. 2.3%. 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.

IMPX1150 (10/22)

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.

Recent Insights

Diederik Basch, CFA®

Portfolio Manager

Diederik is a co-Portfolio Manager for the US Small Cap Strategy, which includes the Pax Small Cap Fund. Diederik started his investment analysis career in 2006 and has worked in the US, Europe and Asia.

Before joining Impax in 2016, Diederik served as Senior Equity Analyst at RobecoSAM AG, a subsidiary of Robeco Group, in Zurich, Switzerland, where he conducted fundamental research, including integration of ESG factors, on the global consumer staples and discretionary sectors. He was a key supporting analyst for the firm’s thematic Sustainable Healthy Living and Sustainable Agribusiness funds. Diederik also completed an assignment in Robeco’s Hong Kong office, working with its Asian Equities team. Prior to RobecoSAM, he was a Senior Associate Analyst at Canaccord Genuity, with a focus on small- and mid-cap companies.

Diederik is a CFA® charterholder and member of the Boston Security Analysts Society. He holds a Bachelor of Arts with a concentration in economics from Brandeis University. Diederik received his MBA from the Kelley School of Business at Indiana University, where he was also a faculty-selected member of the Investment Management Academy.

Recent Insights

Curtis Kim, CFA®

Portfolio Manager

Curtis is a co-Portfolio Manager for the US Small Cap Strategy, which includes the Pax Small Cap Fund.

Prior to joining the firm in 2018, Curtis served as a Generalist Analyst at SGF Capital, a long-short hedge fund focused on small cap equities. He also worked as a Quantitative Associate at Clearbridge Investments, a Legg Mason subsidiary. Curtis joined the investment industry in 2005 at FactSet Research Systems in the role of Product Specialist.

Curtis earned a Bachelor of Arts with a concentration in political science from Colgate University. He received an MBA from Cornell University and is a CFA® charterholder.

Recent Insights

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