Performance and Portfolio Update

    • The Pax Balanced Fund modestly underperformed its benchmark (60% S&P500/40% Bloomberg Barclays U.S. Aggregate Bond Index) in the second quarter but outpaced its peer group benchmark, the Morningstar Allocation – 50% to 70% Equity.
    • Both equity and fixed income markets delivered solid returns in the second quarter. The S&P 500 Index was up 4.3% and the Bloomberg Barclays Aggregate Index nearly kept pace returning 3.08%. While these results are gratifying, there are reasons for caution as we look to the second half of the year. The second quarter return for the S&P 500 Index masks volatility along the way. After the sharp rally to begin the year, the S&P 500 Index sold off -6.4% in May before recovering 7.1% in June. This mirrors the pattern we saw in the fourth quarter of 2018 and early 2019 where investors sold off on earnings risks only to recover on indications that Federal Reserve policy was increasingly dovish.
    • The Fund’s modest underweights to equity and fixed income as well as the minor transitional allocation to cash were detractors from relative performance during the quarter. The Fund’s allocation to non-U.S. equities also hurt performance relative to the benchmark as non-U.S. developed market equities lagged their U.S. counterparts.
    • During the quarter, the Pax Large Cap Fund outperformed the S&P 500 Index and contributed the most to the Balanced Fund performance as the largest underlying equity allocation in the Fund. Conversely, the Pax ESG Beta Dividend Fund detracted from Balanced Fund relative performance during the quarter as its focus on higher dividend yielding companies with stronger profitability profiles was not rewarded in the quarter.
    • The Fund’s equity allocation was reduced in the latter half of the second quarter through the liquidation of the Pax Mid Cap Fund and remains modestly below its 60% neutral target. In connection with the Pax Mid Cap Fund liquidation, an investment was made in the Pax Small Cap Fund to maintain diversification benefits down the market capitalization spectrum. The fixed income allocation also remains modestly below its 40% target. The strong performance of both stocks and bonds has left investors contending with high equity valuations and meager fixed income yields at current interest rate levels. We are maintaining a modest 5% transitional allocation to cash that we will be prepared to deploy across U.S. equity, non-U.S. equity or fixed income as clarity increases on valuations, risks and prospects across these asset classes.
    • The Pax Balanced Fund Institutional Class ranked in the 29th percentile in the Morningstar 50%-70% Equity peer group for the five-year period ended 6/30/19, which we believe is reflective of both its strong performance and risk management.*

*Rankings in other time periods may be lower. Comparison based on the Morningstar 50%-70% Equity peer group for the period ending 6/30/19. The Pax Balanced Fund’s Institutional Class performance for the 1-year period ranked 158 out of 735 (23rd percentile), for the 3-year period ranked 254 out of 679 (39th percentile), for the 5-year period ranked 169 out of 595 (29th percentile), and for the 10-year period 246 out of 431 (56th percentile). The Pax Balanced Fund’s Investor Class performance for the 1-year period ranked 166 out of 735 (30th percentile), for the 3-year period ranked 312 out of 679 (47th percentile), for the 5-year period ranked 205 out of 595 (34th percentile), and for the 10-year period 279 out of 431 (66th percentile).

Performance

(as of 6/30/19)
Returns (%)Average Annual Returns (%)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Balanced Fund - Investor Class4.553.7312.367.367.955.728.438.26
Balanced Fund - Institutional Class4.553.7912.547.618.225.998.718.33
S&P 500 Index7.054.3018.5410.4214.1910.7114.7
60% S&P 500 Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index4.733.9613.649.879.517.7510.50
Morningstar Allocation - 50% to 70% Equity4.282.9512.215.737.795.048.93

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 5/1/2019 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 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 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 Allocation

Relative 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 6/30/19)
Fund
Equity56.7
Pax Large Cap Fund36.9
Pax ESG Beta® Dividend Fund7.0
Pax Mid Cap Fund0.2
Pax Small Cap Fund1.7
Pax Global Opportunities Fund1.6
Pax Global Environmental Markets Fund1.3
Pax MSCI EAFE ESG Leaders Index Fund8.0
Fixed Income38.2
Pax Core Bond Fund37.1
Pax High Yield Bond Fund1.1
Cash & Other5.1
Total100.0


Top 10 Equity Holdings

(as of 6/30/19)
Microsoft Corp. 2.6%, Apple, Inc. 2.3%, Amazon.com, Inc. 2.1%, Merck & Co., Inc. 1.4%, Procter & Gamble Co., The 1.4%, Ingersoll-Rand PLC 1.4%, Visa, Inc., Class A 1.3%, AT&T, Inc. 1.2%, JPMorgan Chase & Co. 1.2% and Alphabet, Inc., Class A 1.1%. Holdings are subject to change.

Definitions

Standard & Poor’s 500 Stock Index is an unmanaged index of large capitalization common stocks.
The Bloomberg Barclays US Aggregate Bond Index is a broad base index, maintained by Bloomberg L.P. often used to represent investment grade bonds being traded in United States.
One cannot invest directly in an index.

©2019 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar, Inc. is an independent investment research firm that compiles and analyzes fund, stock and general market data.

Diversification does not eliminate the risk of experiencing investment loss.

The statements and opinions expressed are those of the authors 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.

PAX008718 (10/19)

Nathan Moser, CFA®

SVP, Portfolio Manager, Pax Small Cap Fund, Pax Sustainable Allocation Fund, Impax Asset Management LLC
Senior Vice President, Pax World Funds

Nathan Moser is SVP and Portfolio Manager of the Pax Small Cap Fund at Impax Asset Management LLC and a Senior Vice President at Pax World Funds. Nathan is also a member of the portfolio management team of the Pax Sustainable Allocation Fund.

Nathan has been responsible for management of the Pax Small Cap Fund since its inception in 2008 and has been a member of the portfolio management team of the Pax Sustainable Allocation Fund since 2015. He joined the firm in 2008 from Citizens Funds, where he worked for six years, first as an equity analyst and then as portfolio manager. He started his career with John Hancock Funds, where he was an equity analyst.

Nathan holds a Bachelor of Science from Babson College, is a CFA® charterholder and member of the CFA Society Boston.

CFA® is a trademark owned by the CFA Institute.

Recent blog posts

Andrew Braun

Portfolio Manager, Pax Large Cap Fund, Pax Sustainable Allocation Fund, Impax Asset Management LLC
Senior Vice President, Pax World Funds

Andrew Braun is a Portfolio Manager of the Pax Large Cap Fund at Impax Asset Management LLC and is a Senior Vice President at Pax World Funds. He is also a member of the portfolio management team of the Pax Sustainable Allocation Fund.

Prior to joining the firm in 2017, Andy was Managing Director on the Value Equity Team at Goldman Sachs Asset Management, where he led a team of 30 portfolio managers and analysts. Andy joined Goldman Sachs Asset Management as a Product Development Associate in the Product Development Group in 1993. He was promoted to Portfolio Manager in 2001 and served as Co-Chief Investment Officer from 2008 to 2014. Prior to joining Goldman Sachs Asset Management, Andy was a Financial Analyst in the Corporate Finance Division at Dillon, Read & Co. Inc.

Andy has a Bachelor of Arts in Economics from Harvard College and a Master of Business Administration in Finance and Economics from the Stern School of Business at New York University.

Recent blog posts

Anthony Trzcinka, CFA®

SVP, Portfolio Manager, Pax Core Bond Fund, Pax Sustainable Allocation Fund, Impax Asset Management LLC
Senior Vice President, Pax World Funds

Anthony Trzcinka is SVP and Portfolio Manager of the Pax Core Bond Fund at Impax Asset Management LLC and a Senior Vice President at Pax World Funds. Tony is also a member of the portfolio management team of the Pax Sustainable Allocation Fund.

Tony has been responsible for multiple strategies during his tenure at Impax Asset Management LLC, formerly Pax World Management LLC. He joined the firm in 2003 from AEW Capital Management where he spent over three years as an Assistant Vice President working in a Senior Analyst role. He began his financial services career as an analyst in 1999.

He holds a Master of Business Administration degree from Northeastern University and a Bachelor of Arts degree from the University of Massachusetts. Tony is a CFA® charterholder and member of the Boston Security Analysts Society.

CFA® is a trademark owned by the CFA Institute.

Recent blog posts

Peter Schwab, CFA®

SVP, Portfolio Manager, Pax High Yield Bond Fund, Pax Sustainable Allocation Fund, Impax Asset Management LLC
Senior Vice President, Pax World Funds

Peter Schwab is SVP and Portfolio Manager of the Pax High Yield Bond Fund at Impax Asset Management LLC and a Senior Vice President at Pax World Funds. Peter is also a member of the portfolio management team of the Pax Sustainable Allocation Fund.

Prior to joining the firm, Peter was a Managing Director on the High Yield Bond and Loan Team at Goldman Sachs Asset Management. Peter joined Goldman Sachs Asset Management as a Senior Sector Analyst in 2000 and was promoted to Director of High Yield Research in 2010. Prior to joining Goldman Sachs Asset Management, Peter was an Investment Associate in the High Yield Group at Putnam Investments and a member of the High Yield Research Group at Donaldson, Lufkin and Jenrette.

Peter has a Bachelor of Arts in History and Economics from Union College and a Master of Business Administration in Finance from Columbia Business School. He is a CFA charter holder, a member of the New York Society of Security Analysts and holds the Series 7 and 63 registrations.

Peter Schwab is a registered representative of ALPS Distributors, Inc.

CFA® is a trademark owned by the CFA Institute.

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