Performance and Portfolio Update
- The Fund underperformed the benchmark Russell 1000 Index in the second quarter. The main drivers of the return difference were the management quality and earnings quality factors used in the strategy construction.
- The tilt toward companies with higher dividend yield had a negative impact on returns as companies with larger dividend payouts trailed the broader market.
- The tilt towards dividend sustainability factors detracted from relative performance. Particularly, the Fund’s exposure to companies with higher management quality and earnings quality resulted in underperformance during the period. These results were slightly offset by the Fund’s positive exposure to profitability, as this factor has performed well in recent history.
- Weighting the portfolio toward companies with stronger ESG characteristics is one of the five factors used in this smart beta strategy, which is designed to deliver strong long-term investment performance. On a short-term basis, however, ESG and other factors can negatively affect returns. The Fund’s overweight allocation to the strongest ESG profiles and underweight to the weaker ESG profiles in aggregate detracted modestly from relative performance.
- Industry exposures, which are driven by the factor and ESG tilts, added to relative returns for the quarter. Particularly, an overweight to specialty retail companies helped relative results as the industry benefitted from investor optimism surrounding stores reopening. These results were partly offset by the underweight to oil and gas companies, which bounced back in the second quarter following extremely poor returns in the first quarter of 2020.1
Performance(as of 6/30/20)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception2|
|Pax ESG Beta Dividend Fund - Investor Class||2.72||20.13||-4.03||5.30||8.91||-||-||9.24|
|Pax ESG Beta Dividend Fund - Institutional Class||2.75||20.20||-3.91||5.53||9.19||-||-||9.53|
|Russell 1000 Index||2.21||21.82||-2.81||7.48||10.64||-||-||11.47|
|Lipper Equity Income Funds Index||-0.16||14.11||-12.26||-4.15||4.29||-||-||5.27|
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 impaxam.com
Figures include reinvested dividends, capital gains distributions and changes in principal value.
2The inception date for the Pax ESG Beta Dividend Fund Institutional Class and the Investor Class is December 16, 2016.
Total annual Pax ESG Beta Dividend Fund operating expenses, gross of any fee waivers or reimbursements, for Investor Class and Institutional Class shares are 0.90% and 0.65%, respectively, as of 5/1/2020 prospectus.ˆ
(as of 6/30/20)
|Total Relative Factor
Past performance is no guarantee of future results.
3Dividend Yield – Purpose: Captures differences in stock returns attributable to stock’s historical and predicted dividend-to-price ratios.
Descriptors: Dividend-to-Price, Predicted Dividend-to-Price
Portfolio Characteristics(as of 6/30/20)
|Market Cap (weighted avg.)∱||$307,922M||$348,396M|
|Number of Securities||140||1,003|
1Q1 2020 Energy sector performance as represented by S&P 500 Index Energy sector.
Top 10 Holdings
(as of 6/30/20)
Microsoft Corp. 5.0%, Apple, Inc. 4.7%, Amazon.com, Inc. 3.7%, Texas Instruments, Inc. 3.1%, Johnson & Johnson 3.0%, IBM 2.8%, Cisco Systems, Inc. 2.6%, Home Depot, Inc., The 2.4%, AT&T, Inc. 2.1% and Proctor & Gamble Co., The 2.0%. Holdings are subject to change.
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 corporations’ 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 3 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 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.