Performance and Portfolio Update

  • The Pax Small Cap Fund trailed its benchmark during the third quarter. The Fund benefited from strong stock selection within Real Estate and Communication Services, however this was offset by poor results within the Financials and Healthcare sectors.
  • Despite elevated unemployment, continued virus spread and uncertainty around the upcoming election, the broader equity market was quite strong during the quarter. Fiscal and monetary stimulus helped support the economy and markets, which allowed investors to take a long-term view with respect to an earnings recovery. The Fund’s higher quality bias suffered in this environment as lower quality stocks in small cap, such as companies with high leverage and those without earnings, led the market higher.
  • Detracting the most from relative performance were holdings in the Financials sector. White Mountains Insurance was the Fund’s worst performer on very little fundamental news. In a year where small cap value has lagged small cap growth by more than 25%, many of our holdings in the Financials sector, including White Mountains, have performed poorly. In most cases, the performance reflects their value attributes, as opposed to a fundamental deterioration in their business.
  • The Real Estate sector was the Fund’s top performer for the period due to strong selection. Cubesmart, a self-storage real estate investment trust (REIT), was a strong performer on better than expected financial results. While the company and the industry has been challenged by strong supply growth, which has impacted pricing trends, we believe these headwinds are fading. We view the company as a high quality, core holding that is well positioned from both a sustainability and financial perspective.
  • Markets continue to demonstrate a remarkable resilience given the numerous underlying risks. Despite periods of heightened volatility, small-cap investors have favored companies on the lower-end of the quality spectrum. This presents performance challenges for quality-focused investors relative to the Russell 2000 Index. As we head into year-end and look forward, we are increasingly optimistic about small-cap companies. After several years of lagging large-cap companies, their relative valuation is nearing the lower end of a 30-year range. In our view, any good news with respect to COVID-19 or additional fiscal stimulus could be a catalyst for the asset class.


(as of 9/30/20)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund – Investor Class-3.551.75-13.02-7.33-1.603.257.766.75
Small Cap Fund – Class A-3.641.76-13.06-7.36-1.623.237.756.75
Small Cap Fund – Institutional Class-3.581.81-12.89-7.12-1.373.508.037.02
Russell 2000 Index-3.344.93-8.690.391.778.009.857.91
Lipper Small-Cap Core Funds Index-4.422.92-14.68-7.82-0.506.308.717.20

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 9/30/20)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-8.95-3.85-17.83-12.46-3.462.077.146.27

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 5.86% (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 9/30/20)
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 9/30/20)
Market Cap (weighted avg.)$2,751M$2,432M
Forward Price/Earnings16.2816.79
Number of Securities622,018

Top Ten Holdings

(as of 9/30/20)
Victory Capital Holdings, Inc., Class A 4.9%, HomeTrust Bancshares, Inc. 3.9% , Coherus BioSciences, Inc. 3.4%, Meridian Bancorp, Inc. 3.3%, Ligand Pharmaceuticals, Inc. 3.3%, White Mountains Insurance Group, Ltd. 3.0%, CubeSmart 2.7 %, Healthcare Realty Trust, Inc. 2.5%, Natus Medical, Inc. 2.5% and Flex, Ltd. 2.4%. 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.

PAX009501 (1/21)

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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