Performance and Portfolio Update
- The Pax Core Bond Fund underperformed the Bloomberg Barclays U.S. Aggregate in the fourth quarter.
- The Fund’s corporate bonds were the largest detractors to performance during the quarter. Many of the Fund’s holdings in these sectors are high credit quality and have lower duration which have caused them to lag in the bond market rally. Many investors are calling this a “mini-Goldilocks” period with global growth perking up and inflation staying low. This has been a very good environment for risk-assets.
- The main drivers of positive relative performance were the Fund’s treasury and agency mortgage-backed security positions. Many of the Fund’s treasury securities have a long duration and benefited from a declining yield environment. In addition, the Fund’s underweight to agency mortgage backed securities helped relative performance as lower rates drove an uptick in mortgage prepayments.
- Overall, we feel the Fund should be positioned to perform well in a late credit cycle environment. The Fund’s underweight to treasuries and agency mortgage-backed securities helped as both sectors had relatively weak performance in a volatile rate environment.
- The Fund continues to add impact holdings across multiple sectors in the portfolio. At the end of December 2019, 28% of the Fund’s assets were in securities classified as impact. The impact bond market, while relatively new, is growing at a fast pace. As such we expect the Fund’s allocation to these impact holdings to increase.
Performance(as of 12/31/19)
|Returns (%)||Average Annual Returns (%)|
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Core Bond Fund - Investor Class||-0.19||-0.11||7.78||7.78||3.31||-||-||3.57|
|Core Bond Fund - Institutional Class||-0.26||-0.05||8.04||8.04||3.57||-||-||3.83|
|Bloomberg Barclays US Aggregate Index||-0.07||0.18||8.72||8.72||4.03||-||-||4.35|
|Lipper Core Bond Funds Index||0.16||0.39||9.39||9.39||4.22||-||-||4.49|
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 information call 800.767.1729 or visit paxworld.com
Figures include reinvested dividends, capital gains distributions and changes in principal value.
1The inception date for the Pax Core Bond Fund Institutional Class and Investor Class is December 16, 2016.
As of 5/1/19 prospectus, total annual Core Bond Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Investor Class and Institutional Class shares are 0.71% and 0.46%, respectively.
(as of 12/31/19)
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 12/31/19)
|Years to Maturity∼||13.71||13.04|
|30 Day SEC Yield∘|
Top 10 Holdings
(as of 12/31/19)
United States Treasury Note, 1.500%, 10/31/24 4.1%, United States Treasury Note, 2.375%, 11/15/49 4.0%, United States Treasury Note, 2.750%, 9/30/20 2.4%, United States Treasury Note, 2.125%, 11/30/23 2.2%, United States Treasury Note, 0.375%, 7/15/27 1.5%, United States Treasury Note, 4.500%, 2/15/36 1.3%, United States Treasury Note, 4.375%, 11/15/39 1.1%, United States Treasury Note, 3.500%, 2/15/39 1.0%, United States Treasury Note, 2.250%, 3/31/26 1.0% and United States Treasury Note, 2.375%, 3/15/21 1.0%. Holdings are subject to change.
∱Effective Duration is a measure of a security’s price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations.
∼Years to Maturity (weighted average) is the number of years until the bond matures and/or expires.
∘30-Day SEC Yield: An annualized yield based on the most recent 30-day period.
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.