Performance and Portfolio Update

  • The Pax Small Cap Fund trailed the Russell 2000 Index in the third quarter. Portfolio holdings within Financials, Healthcare and Industrials were key detractors.
  • Growth stocks outperformed value with the Russell 2000 Growth Index return of 6.22% topping the Russell 2000 Value Index by 1.11%. For the year-to-date period, growth has outperformed by 11.13%. This performance continues to be a headwind to the Fund’s performance given our tilt towards value.
  • Financials were a meaningful laggard during the period due to our insurance holdings, which were negatively impacted by multiple hurricanes and the Mexico City earthquake. We have reduced our exposure to the group as meaningful declines in book value make valuations less attractive.
  • The Fund benefited from strong stock selection in the Consumer Staples and Materials sectors. Within Consumer Staples, our holding in Blue Buffalo Pet Products, increased 28% on better than expected earnings and expanded distribution to the mass retail and grocery channels.
  • Equity markets have remained more resilient in 2017 than we expected. The delay in fiscal stimulus out of Washington, rising geopolitical tensions and near record high valuations have been brushed aside by many investors. In a market increasingly influenced by quantitative and passive investing vehicles, momentum continues to be the dominating factor driving returns. As a group, these investors account for approximately 40% of the market, up meaningfully over the past decade. In our view, the trend of momentum leadership will likely not reverse until we experience a meaningful increase in volatility. It is unknown what will trigger a spike in volatility and when that will occur exactly. What is more certain is that there is a long way down to fair value for equity markets.


(as of 9/30/17)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Individual Investor Class4.142.503.0911.327.4113.21-9.54
Small Cap Fund - Class A˜4.142.503.1011.357.4013.21-9.53
Small Cap Fund - Institutional Class4.172.613.3211.597.6913.49-9.82
Russell 2000 Index6.245.6710.9420.7412.1813.797.859.92
Lipper Small-Cap Core Funds Index6.055.279.3820.1711.3913.407.789.75

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 information visit

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

As of 5/1/17 prospectus, total annual Small Cap Fund operating expenses, gross of any fee waivers or reimbursements, for Individual Investor Class, Class A, and Institutional Class shares are 1.19%, 1.19% and 0.94%, respectively.

1The inception date for the Pax Small Cap Fund Institutional Investor Class and the Individual 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 Individual 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 11.27% (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%.

after sales charge

(as of 9/30/17)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Small Cap Fund - Class A (Load)-1.58-3.11-2.575.255.3811.93-8.89

Performance Attribution

(as of 9/30/17)
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 9/30/17)
Market Cap (weighted avg.)$2,954M$2,201M
Forward Price/Earnings22.5320.22
Number of Securities591,999

Top Ten Holdings

(as of 9/30/17)
Investors Bancorp, Inc. 3.5%, Natus Medical, Inc. 3.4%, Capitol Federal Financial, Inc. 3.2%, White Mountains Insurance Group, Ltd. 3.0%, Ligand Pharmaceuticals, Inc. 3.0%, Antero Resources Corp. 2.8%, Carter’s, Inc. 2.7%, HomeTrust Bancshares, Inc. 2.7%, SemGroup Corp., Class A 2.6% and Beacon Roofing Supply, Inc. 2.5%. Holdings are subject to change.


Russell 2000 Growth Index is a market capitalization weighted index that measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth rates. One cannot invest directly in an index.
Russell 2000 Value Index is a market capitalization weighted index that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth rates. One cannot invest directly in an index.
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. 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.

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.

PAX007449 (1/18)

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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