Performance and Portfolio Update
- The Pax Balanced Fund underperformed its benchmark (60% S&P500/40% Bloomberg Barclays US Aggregate Bond Index) in the second quarter, while ranking in the 40th percentile in its Morningstar Allocation–50% to 70% Equity peer group. The allocation to non-U.S. equities was the largest detractor to performance relative to the benchmark as U.S. equities significantly outperformed international equities.
- U.S. stocks bounced back from a negative first quarter with the S&P 500 Index† returning 3.43%, buoyed by expectations of continued economic and earnings strength. Stocks outperformed bonds as the Bloomberg Barclays US Aggregate Bond Index‡ returned -0.16%. While U.S. stocks posted a solid return, non-U.S. developed market equities, as represented by the MSCI EAFE Index, were off -1.24% in the face of a strong U.S. dollar and concerns related to international trade and tariffs and potential slowing in synchronized global growth.
- The allocation to non-U.S. equities was the largest detractor to performance relative to its benchmark given the significant performance advantage of the S&P 500 Index relative to the MSCI EAFE Index. The Pax Large Cap Fund and Pax Mid Cap Fund also detracted from performance as they trailed their respective benchmarks. The modest tilt toward equities and performance of the Pax Core Bond Fund contributed positively to performance.
- The Fund’s equity allocation remains modestly above its 60% neutral target and fixed-income allocation modestly below its 40% target as we continue to balance strong near-term earnings prospects with potential impact of risks, including escalating trade tensions, signs of inflation accelerating and early signs of a sooner than expected slow-down in the U.S. economy.
Performance(as of 6/30/18)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Balanced Fund - Individual Investor Class||0.30||1.20||0.39||6.90||6.02||7.50||5.17||8.28|
|Balanced Fund - Institutional Class||0.33||1.26||0.55||7.22||6.31||7.77||5.44||8.35|
|S&P 500 Index||0.62||3.43||2.65||14.37||11.93||13.42||10.17|
|60% S&P 500 Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index||0.32||1.99||1.00||8.34||7.88||8.97||7.84|
|Morningstar Allocation--50% to 70% Equity||-0.02||1.16||-0.11||6.58||5.59||6.85||6.27|
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 paxstaging.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 Investor Class inception date is August 10, 1971. The performance information shown for Institutional Class shares includes the performance of 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.
As of the 5/1/2018 prospectus, the Pax Balanced Fund All-In Gross expense ratio includes indirect expenses (Acquired Fund Fees and Expenses “AFFE”) of 0.61%. AFFE are fees and expenses charged by their investment companies in which the Fund invests a portion of its assets and are not direct costs paid by Fund shareholders. The All-In Gross expense ratio for Institutional Class and the Individual Investor Class shares are 0.66% and 0.91%, respectively. Pax Balanced Fund expense ratios, excluding indirect AFFE, are 0.05% and 0.30% for Institutional Class and Individual Investor Class shares, respectively. The management fee is a unified fee that includes all of the operating costs and expenses of the Fund (other than taxes, charges of governmental agencies, interest, brokerage commissions incurred in connection with portfolio transactions, distribution and/or service fees payable under a plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 and extraordinary expenses), including accounting expenses, administrator, transfer agent and custodian fees, Fund legal fees and other expenses. (For this purpose, Impax Asset Management LLC does not consider acquired fund fees and expenses to be operating costs and expenses of the Fund.)
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. The Inception date of the Pax Global Opportunities Fund is June 27, 2018.
Asset Allocation (%)(as of 6/30/18)
|Pax Large Cap Fund||37.4|
|Pax ESG Beta® Dividend Fund||7.1|
|Pax Mid Cap Fund||6.9|
|Pax Global Environmental Markets Fund||0.5|
|Pax Global Opportunities Fund||1.4|
|Pax MSCI EAFE ESG Leaders Index Fund||8.4|
|Pax Core Bond Fund||37.5|
|Cash & Other||0.8|
Top Ten Holdings
(as of 6/30/18)
Microsoft Corp. 2.3%, Amazon.com, Inc. 2.1%, Apple, Inc. 1.7%, Biogen Idec, Inc. 1.4%, Home Depot, Inc., The 1.4%, Alphabet, Inc., Class A 1.2%, PepsiCo, Inc. 1.2%, Bank of America Corp. 1.2%, Alphabet, Inc., Class C 1.1% and JPMorgan Chase & Co. 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.