Performance and Portfolio Update


  • The Pax Small Cap Fund outperformed the Russell 2000 Index during the fourth quarter. Overall, Fund performance was driven by strong stock selection with a modest benefit from sector allocation.

Market Review

  • Improving economic data has broadly been supportive for US equity markets, although Covid-19 remains a determining factor influencing the trajectory of equity markets. During the quarter, the Omicron variant caused concerns about economic growth and small cap stocks lagged their larger counterparts as investors gravitated toward higher quality areas of the market. That said, despite the emergence of Omicron and margin pressures from broad-based inflation, earnings growth remained strong. Small cap stocks, as measured by the Russell 2000 Index, increased 2.12% and 14.82% for the fourth quarter and for calendar year 2021, respectively. The Fund’s institutional class outperformed the benchmark handily returning 6.44% and 30.54% for the fourth quarter and for calendar year 2021, respectively.


  • From an attribution perspective, Healthcare and Technology were the Fund’s best performing sectors. Within those sectors, both strong stock selection and an underweight allocation compared to the benchmark contributed to relative performance. One of the Fund’s best performing companies, Ciena, is a leading provider of optical networking infrastructure, and advanced 50% during the reporting period. The company reported very strong quarterly results and increased its guidance for the year ahead.


  • Real Estate was the worst performing sector, largely due to poor performance of Fund holdings during the fourth quarter. Our holding in Catchmark Timber, a timber REIT, was largely responsible for this underperformance. The company’s shares declined -26% due to an unprofitable exit from a joint venture and a reduction in its dividend. While we applaud management’s decision to simplify the business, by focusing on their core Southeast US timber acreage, we were disappointed by the deterioration in value within the joint venture.


  • The outlook for the year ahead is highly uncertain. While the economy continues to be quite strong, there are signs of moderation as higher than anticipated inflation is starting to impact growth. Complicating the outlook is the change in stance at the Federal Reserve and the likelihood that they will initiate a transition to more restrictive monetary policies. The combination of potentially rising interest rates into an economy with moderating growth is atypical and could lead to periods of increased volatility. In this environment, lower quality and highly valued companies could underperform their more reasonably priced, higher quality counterparts.


(as of 12/31/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund – Investor Class2.936.3430.1930.1921.4910.4312.4710.16
Small Cap Fund – Class A2.896.3130.2230.2221.4810.4312.4710.16
Small Cap Fund – Institutional Class2.976.4430.5430.5421.7910.7212.7510.44
Russell 2000 Index2.232.1414.8214.8220.0212.0213.2310.41
Lipper Small-Cap Core Funds Index4.785.8825.5525.5520.1511.9112.9710.37

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 12/31/21)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-2.780.4723.0323.0319.209.1911.839.71

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 11.41% (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 12/31/21)
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 12/31/21)
Market Cap (weighted avg.)$4,372M$3,484M
Forward Price/Earnings17.9616.01
Number of Securities582,038

Top Ten Holdings

(as of 12/31/21)
Victory Capital Holdings, Inc., Class A 4.9%, HomeTrust Bancshares, Inc. 3.2%, Independent Bank Corp. 3.1%, BrightSphere Investment Group, Inc. 2.9%, Ligand Pharmaceuticals, Inc. 2.8%, AZEK Company, Inc., Class A 2.6%, Rayonier, Inc. 2.5%, Onto Innovation, Inc. 2.5%, Ciena Corp. 2.3% and Vocera Communications, 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.

IMPX0907 (4/22)

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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