Performance and Portfolio Update
- In the second quarter, the Pax U.S. Sustainable Economy Fund performed in-line with the Russell 1000 Index.
- Investment strategy: The strategy integrates Impax Sustainability Lens, a proprietary tool that helps the advisor systematically overweight the portfolio toward sub-industries we identify as high opportunity in the context of the transition to a more sustainable economy, while removing exposure to sub-industries classified as low opportunity and high risk. The Fund is also constructed to provide higher exposure to companies with favorable environmental, social and governance (ESG) ratings relative to their sector and industry peers, as determined by the Impax Sustainability Score. Lastly, the strategy is fossil fuel free, utilizing SmartCarbonTM, a proprietary tool that replaces energy sector holdings with energy efficiency stocks. The Fund’s optimization process applies appropriate constraints to create a diversified portfolio of approximately 200 stocks.
- Asset class conditions: US Large Cap equity markets, as measured by the Russell 1000 Index, increased by 8.54% during the second quarter, driven by continued reopening and expansion of the economy. Equity markets rotated toward companies with higher profitability and lower volatility, and high beta1 stocks took a pause after leading markets during the first quarter. This market environment had a negligible impact on Fund performance and did not produce a meaningful tailwind or headwind.
- Impax Sustainability Lens attribution: The primary contributors to Fund performance were overweight positioning to high opportunity sub-industries and the absence of exposure to low opportunity/high risk sub-industries. The high opportunity sub-industries of Application Software and Life Sciences Tools and Services were strong contributors during the period. The companies in these sub-industries are exposed to many areas of the market where we see future growth and innovation, such as digital infrastructure, automation and environmental analysis. There was value on the other end of the spectrum as well, with positive contribution coming from avoiding sub-industries at more risk in the transition to a more sustainable economy. For example, underweight exposures to the high-risk industries of Electric Utilities, Diversified Banks, Automobile Manufacturers and Hotels & Resorts were all additive.
- Impax Sustainability Score attribution: The allocation to highly-rated companies according to the Impax Sustainability Score detracted from relative performance during the period. Companies with poor ESG (Environmental, Social and Governance) characteristics outperformed their peers, with the exception of constituents within the Information Technology and Industrial sectors. For example, not owning Amazon and Facebook detracted from Fund performance, while active exposures to Verizon, Intel and MetLife were also detrimental to return. On a positive note, NVIDIA, which has a very high Sustainability Score, was the single largest contributor.
- SmartCarbonTM attribution: During the quarter, the Fund’s avoidance of the Energy sector due to its SmartCarbon approach, detracted from performance due to rising oil prices but was partially offset by stock selection within the Fund’s energy efficiency replacement holdings.
Performance(as of 6/30/21)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception2|
|Pax U.S. Sustainable Economy Fund - Investor Class||2.42||8.44||16.42||39.23||16.61||15.75||12.16||6.73|
|Pax U.S. Sustainable Economy Fund - Class A||2.44||8.48||16.44||39.26||16.61||15.75||12.17||6.74|
|Pax U.S. Sustainable Economy Fund - Institutional Class||2.46||8.53||16.59||39.59||16.89||16.04||12.44||6.88|
|Russell 1000 Index||2.51||8.54||14.95||43.07||19.16||17.99||14.90||-|
|Lipper Multi-Cap Core Funds Index||1.97||7.66||14.23||43.41||17.30||16.72||13.09||-|
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. To obtain performance for the most recent month-end, call 800.767.1729 or visit impaxam.com
Figures include reinvested dividends, capital gains distributions and changes in principal value.
Performance (as of 6/30/21)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Pax U.S. Sustainable Economy Fund - Class A (Load)||-3.20||2.51||10.03||31.60||14.43||14.45||11.53||6.49|
2The inception date for the Pax U.S. Sustainable Economy Fund Institutional Class is April 2, 2007, the Investor Class inception date is June 11, 1997, and the Class A shares inception date is May 1, 2013.
The performance information shown for Institutional Class shares represents the performance of the Investor Class shares for the period prior to Institutional Class inception (April 2, 2007). Expenses have not been adjusted to reflect the expenses allocable to Institutional Class shares. If such expenses were reflected, the returns would be higher than those shown. Institutional Class shares average annual return since April 2, 2007, is 9.79% (annualized).
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 13.83% (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%.
Portfolio Characteristics(as of 6/30/21)
|Market Cap (weighted avg.)∱||$399,436M||$480,898M|
|Number of Securities||202||1,023|
1Beta 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.
Top 10 Holdings
(as of 6/30/21)
Apple, Inc. 5.3%, Microsoft Corp. 4.8%, Alphabet, Inc., Class A 3.4%, NVIDIA Corp. 3.3%, Johnson & Johnson 2.0%, Thermo Fisher Scientific, Inc. 2.0%, Verizon Communications, Inc. 1.9%, Zoetis, Inc. 1.9%, Lam Research Corp. 1.7% and Home Depot, Inc., The 1.7%. 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 3 years of performance history under the same mandate. Three-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.