Performance and Portfolio Update
- The Pax Balanced Fund modestly outperformed its benchmark (60% S&P 500 Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index) in the first quarter.
- Equity markets endured their first negative quarter since 2015, with the S&P 500 Index† off -0.76%, but still outperformed bonds as the Bloomberg Barclays US Aggregate Bond Index‡ was off -1.46%. After a very strong start to the year in January, equity markets sold off significantly over two weeks, touching correction levels of -10% on inflation fears and the potential impact on interest rates. Later in the quarter, data concerns at Facebook triggered a steep drop in Technology shares and fears of a trade war between the U.S. and China also weighed on market returns.
- The Balanced Fund’s outperformance was driven by positive underlying fund results during the first quarter. Conversely, the Fund’s allocation to Non-U.S. developed market equities detracted from performance as U.S. equities outperformed international equities during the period.
- The Pax Large Cap Fund was the largest contributor to return as it delivered a modestly positive return amid the S&P 500 Index’s negative return. Strong stock selection in the Financials and Consumer Staples sectors was the primary driver of outperformance in the Large Cap Fund. The Pax MSCI EAFE ESG Leaders Index Fund, which is tilted toward Non-U.S. Developed market companies with strong ESG profiles, outperformed the MSCI EAFE Index in the quarter.
- Looking through all the volatility in February and March, the S&P 500 Index is off nearly -10% from its late-January peak. The price decline combined with continuing strong earnings growth have left market valuations at more reasonable levels. The Fund’s equity to fixed income allocation was roughly in-line with a neutral 60%/40% target at quarter-end, however going forward, we anticipate maintaining a modest tilt toward equities as we balance equity valuations and strong near-term earnings prospects with the potential impact of a number of risks including a potential trade war, signs of inflation acceleration and early signs of a slow-down in the economy.
Performance(as of 3/31/18)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Balanced Fund - Individual Investor Class||-0.97||-0.79||-0.79||8.43||5.48||7.14||5.06||8.30|
|Balanced Fund - Institutional Class||-0.95||-0.70||-0.70||8.74||5.75||7.41||5.32||8.36|
|S&P 500 Index||-2.54||-0.76||-0.76||13.99||10.78||13.31||9.49|
|60% S&P 500 Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index||-1.27||-0.97||-0.97||8.81||6.99||8.72||7.42|
|Lipper Mixed-Asset Target Growth Funds Index||-0.90||-1.26||-1.26||7.78||4.89||6.55||6.06|
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 paxworld.wpengine.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
1The inception date for the Pax Balanced Fund Institutional Class is April 2, 2007 and the Individual Investor Class inception date is August 10, 1971. The performance information shown for Institutional Class shares includes the performance of Individual Investor Class shares for the period prior to Institutional Class inception. 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.
Effective 5/1/2017, the Pax Balanced Fund Net Annual Fund Operating Expense ratio including acquired Fund Fees and net fee waivers or reimbursements for the Institutional Share Class is 0.63%, the Total Annual Fund Operating Expense ratio including acquired Fund Fees and gross fee waivers or reimbursements is 0.68%. The Pax Balanced Fund Net Annual Fund Operating Expense ratio including acquired Fund Fees and net fee waivers or reimbursements for the Individual Investor Share Class is 0.93%, the Total Annual Fund Operating Expense ratio including acquired Fund Fees and gross fee waivers or reimbursements is 0.92%.
Asset AllocationRelative Contribution (%)
Past performance is no guarantee of future results.
XThe Inception date of the Pax Large Cap Fund, Pax ESG Beta Dividend Fund and Pax Core Bond Fund is December 16, 2016.
Asset Allocation (%)(as of 3/31/18)
|Pax Large Cap Fund∼||35.1|
|Pax ESG Beta® Dividend Fund∼||7.3|
|Pax Mid Cap Fund||6.7|
|Pax MSCI EAFE ESG Leaders Index Fund||9.4|
|Pax Core Bond Fund∼||35.1|
|Cash & Other||5.6|
Top Ten Holdings
(as of 3/31/18)
Microsoft Corp. 2.1%, Amazon.com, Inc. 2.0%, Apple, Inc. 1.5%, Home Depot, Inc., The 1.4%, Zoetis, Inc. 1.2%
Bank of America Corp. 1.2%, PepsiCo, Inc. 1.2%, Johnson & Johnson 1.2%, Alphabet, Inc., Class A 1.1% and Waste Management, Inc. 1.1%. Holdings are subject to change.
†Standard & Poor’s 500 Stock Index is an unmanaged index of large capitalization common stocks.
‡Bloomberg Barclays U.S. Aggregate Bond Index represents securities that are U.S. domestic, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities and asset-backed securities. One cannot invest directly in an index. One cannot invest directly in an index.
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.