Performance and Portfolio Update

  • The Pax Small Cap Fund outperformed the Russell 2000 Index during the third quarter. Overall, Fund performance was driven by strong stock selection with a modest benefit from sector allocation.
  • Small cap stocks, as measured by the Russell 2000 Index, declined -4.36% during the period as the asset class continues to digest very strong performance from 2020 and the first quarter of 2021. The economic recovery continued during the period, driving strong small cap earnings growth.
  • From an attribution perspective, Healthcare was the Fund’s best performing sector. Both strong stock selection and an underweight allocation contributed to relative performance. Vocera Communications, a provider of hands-free communications to healthcare workers, advanced 15% during the quarter. We believe the company is well positioned as its technology helps improve patient care and medical personnel safety. During the quarter, the company reported strong financial results and raised full year guidance.
  • The Energy and Industrials sectors detracted from performance. We have no exposure to Energy, as the Fund is fossil fuel free, and given the strong performance of the sector, the Fund’s relative return was negatively impacted. In Industrials, our position in AZEK, a provider of environmentally friendly building products, was a notable detractor from Fund performance declining -14% during the period. The company has been negatively impacted by higher input costs, supply chain concerns and private equity holders reducing positions. We view these as short-term headwinds and remain positive on AZEK’s long-term outlook.
  • From a sector standpoint, we have overweight allocations to Financials, Industrials, Consumer Staples and Real Estate. We continue to find value in Financials and added Brightsphere Investment Group early in the quarter. After a series of affiliate sales, the company’s last remaining affiliate is Acadian, a quantitative asset manager. Given Brightsphere’s strong investment performance, improving fund flows and a discounted valuation, we believe shares represent a compelling opportunity.
  • Small cap valuations have moderated over the year despite expectations of strong earnings growth. We remain positive on the group, but are monitoring potential risks. One macro-economic risk that we are watching closely is inflation. Inflation readings continue to surpass expectations, exacerbated by supply chain challenges, labor shortages and monetary/fiscal policy. It appears that higher than expected inflation will continue into next year, which could temper economic growth. In this environment, we believe higher quality companies with durable competitive advantages and pricing power should outperform.


(as of 9/30/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund – Investor Class-3.79-0.9222.4257.3212.4010.7813.259.86
Small Cap Fund – Class A-3.75-0.9322.4957.4212.3910.7813.259.86
Small Cap Fund – Institutional Class-3.79-0.9122.6457.7612.6711.0413.5410.14
Russell 2000 Index-2.95-4.3612.4147.6810.5413.4514.6310.44
Lipper Small-Cap Core Funds Index-2.49-2.0818.5853.839.9712.7413.7910.10

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 5/1/21 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 0.94%, respectively.

after sales charge

(as of 9/30/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-9.03-6.3715.7248.7610.319.5412.619.40

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 10.96% (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 9/30/21)
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 9/30/21)
Market Cap (weighted avg.)$3,810M$3,323M
Forward Price/Earnings16.5515.84
Number of Securities562,026

Top Ten Holdings

(as of 9/30/21)
Victory Capital Holdings, Inc., Class A 5.4%, HomeTrust Bancshares, Inc. 3.8%, Meridian Bancorp, Inc. 3.5%, BrightSphere Investment Group, Inc. 2.6%, Rayonier, Inc. 2.5%, Natus Medical, Inc. 2.5%, Voya Financial, Inc. 2.5%, Health Catalyst, Inc. 2.4%, CatchMark Timber Trust, Inc, Class A, REIT 2.2% and Ligand Pharmaceuticals, Inc. 2.1%. 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.

IMPX0730 (1/22)

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.

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