• In the third quarter, the Pax US Sustainable Economy Fund underperformed the Russell 1000 Index.

Investment Strategy

  • The portfolio integrates the Impax Sustainability Lens, a proprietary tool that helps the adviser 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 Systematic ESG Rating1. Lastly, the portfolio 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.


  • Despite a relief rally at the start of the quarter, equity and bond markets were weaker over the period as central banks moved to contain inflation by further raising interest rates. While rate hikes were not unexpected, the magnitude and the associated commentary took the market by surprise. The US Federal Reserve indicated it would continue raising rates into next year, dampening hopes that a peak was in sight. Further volatility came from the United Kingdom, where the announcement of tax cuts, unsupported by full budget disclosure, led to sterling weakness and a sharp selloff in bonds. Currency moves were once again significant over the quarter, with the dollar continuing to gain against multiple currencies.
  • The Russell 1000 returned -4.6% as investors factored in higher interest rates and potentially slower economic growth. Only Consumer Staples (7.1%) and Energy (+3.2%) were in positive territory while Communications (-10.8%), Real Estate (-10.8%) and Materials (-7.1%) were the bottom sectors, reflecting concerns over higher interest rates and slower economic growth.

Impax Sustainability Lens

  • The Impax Sustainability Lens, which rates sub-industries on both Sustainability Risk and Opportunity scales, is a central tool to guide the Fund to identify sub-industries that will benefit from the transition to a more sustainable economy over the long-term. The portfolio will overweight Lower Risk Sub-Industries, and underweight High Risk sub-industries. Low Risk Sub-industries underperformed the market and High Risk sub-industries in the quarter, detracting from performance. The portfolio’s avoidance of High Risk Low Opportunity industries like Automotive Manufacturers and Oil & Gas Exploration were particularly impactful, as companies in those industries performed well over the quarter.
  • In a similar vein, the portfolio’s tilts towards High Opportunity sub-industries, and away from Low Opportunity categories were a drag to performance. Low Opportunity sub-industries outperformed High Opportunity sub-industries and the market over the quarter; as a result lens positioning across the Opportunity dimension was negative. Overweight positions in High Opportunity areas like Integrated Telecomms, Water Utilities and Pharmaceuticals were among the largest detractors from performance for the quarter.

Impax Systematic ESG Rating

  • We believe, that by eliminating stocks with low ESG ratings, as determined by the Impax Systematic ESG Rating, we can improve the overall volatility profile of the portfolio and target securities better positioned to benefit from the transition to a more sustainable economy over the long-term than the broad index. However, this quarter, the Fund’s bias towards stocks with high Impax Systematic ESG ratings provided a significant headwind. Stocks with highest scores underperformed the rest of the investable universe, and the portfolio’s high conviction tilt towards those stocks that score well across the Environment, Social and Governance dimension was one of the largest detractors to portfolio performance.

SmartCarbonTM Attribution

  • Not owning traditional Energy companies has been a consistent headwind to the Fund in 2022, and this continued in the third quarter. The Fund’s SmartCarbonTM framework, which replaces the traditional energy exposure with companies that are positioned to provide more energy efficiency underperformed modestly, with Industrials and Consumer Discretionary outperfoming the index, but underperforming the Energy sector. SmartCarbonTM securities in the Consumer Discretionary sector lagged the broad market significantly. In a quarter in which Energy was the best performer in the index, not owning traditional Energy companies, and substituting them with energy efficiency names detracted from performance.

GICS2 Sector Attribution

  • Sector positioning is an outcome of the portfolio construction process rather than a deliberate exposure. The portfolio’s sector positioning was negative for the third quarter; the lack of exposure to Energy, an underweight to Consumer Discretionary, and an overweight to Real Estate were the primary drivers of negative sector selection for the period.


(as of 9/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception3
Pax US Sustainable Economy Fund - Investor Class-9.24-6.95-25.45-17.015.667.459.925.62
Pax US Sustainable Economy Fund - Class A-9.23-6.93-25.43-16.995.667.459.925.63
Pax US Sustainable Economy Fund - Institutional Class-9.18-6.88-25.28-16.795.937.7110.195.78
Russell 1000 Index-9.25-4.61-24.59-17.227.959.0011.60-
Lipper Multi-Cap Core Funds Index-8.92-4.79-24.17-17.787.267.5110.34-

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

Figures include reinvested dividends, capital gains distributions and changes in principal value.

As of 5/1/2022 prospectus, total annual Pax US Sustainable Economy Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Institutional Class, Investor Class and Class A shares are 0.63%, 0.88% and 0.88%, respectively.ˆ

after sales charge

(as of 9/30/22)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception3
Pax US Sustainable Economy Fund - Class A (Load)-14.23-12.05-29.54-21.543.696.259.305.39

3The inception date for the Pax US 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 7.71% (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 9.74% (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 9/30/22)
Market Cap (weighted avg.)$353,371M$424,782M
Forward Price/Earnings16.3915.81
Number of Securities1891,015

1The Impax Systematic ESG Rating is a proprietary rating of companies’ environmental, social and governance (ESG) performance developed by Impax’s Sustainability and ESG Team. The rating is designed to capture material information that may bear on a company’s risk and performance potential. The Impax Systematic ESG Rating combines original, in-house research and analysis with multiple sources of third-party ESG and publicly available data to quantify an overall ESG company ranking versus peers.

The Impax Systematic ESG rating calculation includes some elements that could be considered qualitative or subjective, including, customized peer groups on limited occasions that may deviate from standard industry classifications in order to facilitate meaningful quantitative comparisons; selection of relevant ESG issues and indicators; determining weights or scoring of components/indicators; and some manual adjustments on occasions where the Impax Sustainability and ESG team determines that the calculated score based on available indicators does not adequately reflect the materiality or risk/return implications of certain ESG issues for a particular company.

2The Global Industry Classification Standard (GICS) is a widely recognized industry standard for assigning a public company to the economic sector and industry group that best defines its business. It was developed jointly by MSCI and Standard & Poor’s and is used by the MSCI indexes.

Top 10 Holdings

(as of 9/30/22)
Apple, Inc. 6.2%, Microsoft Corp. 4.8%, Alphabet, Inc., Class A 2.8%, Johnson & Johnson 2.3%, Bristol-Myers Squibb Co. 1.9%, Texas Instruments, Inc. 1.8%, NVIDIA Corp. 1.8%, Eli Lilly & Co. 1.8%, Home Depot, Inc., The 1.7% and Waste Management, Inc. 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.

IMPX1270 (1/23)

Scott LaBreche

Portfolio Manager

Scott LaBreche is Portfolio Manager & VP, Portfolio Analytics, at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

Scott is a Portfolio Manager of the Global Women’s Leadership Strategy, which includes the Pax Ellevate Global Women’s Leadership Fund. He is also a Portfolio Manager of the Pax International Sustainable Economy Fund, the Pax Global Sustainable Infrastructure Fund and the Pax U.S. Sustainable Economy Fund.

He is responsible for portfolio management of systematic strategies, portfolio analytics and risk oversight, and quantitative ESG research.

Before joining Impax in 2007, Scott was a Securities Fund Analyst at Lincoln Financial Group. He has been in the investment management industry since 1999.

Scott holds a Bachelor of Science in business administration and a Master of Business Administration with advanced certificate in finance from Southern New Hampshire University.

Recent Insights

Christine Cappabianca

Portfolio Manager

Christine co-manages Impax’s Systematic strategies and the actively managed Sustainable Infrastructure strategy.

Christine’s research brings a focus on identifying and emphasizing the optimal sources of return within sustainable/thematic universes and removing any unintentional portfolio biases.

Before joining Impax in 2021, Christine spent 14 years with Mellon, where she held several positions, most recently as senior quantitative research analyst and portfolio manager for the firm’s Internet of Things, Blockchain Innovation, U.S. Manufacturing and Smart Cures Innovation thematic strategies. She also served as the ESG data expert on Mellon’s ESG Council. In these roles she focused on informing active portfolios with the power of data and sustainability metrics.

Christine earned a Bachelor of Arts in economics at Harvard University and a Master of Science in investment management at Boston University. She holds the SASB FSA Credential.

Recent Insights

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