Performance and Portfolio Update
- The Fund trailed the benchmark Russell 1000 Index in the fourth quarter primarily due to dividend sustainability factors which did not keep pace in the strong market rally.
- The tilt towards dividend sustainability factors detracted from relative performance. Particularly, the Fund’s exposure to companies with higher profitability and earnings quality resulted in underperformance during the period. This was slightly offset by exposure to companies with higher management quality which contributed to relative returns.
- The tilt toward companies with higher dividend yield had a negligible impact on returns.
- The Fund overweights its portfolio toward companies with ESG strength, as measured by the Impax Sustainability Scorex. During the quarter, this overweight to ESG leaders and accompanying underweight to companies with weaker ESG profiles had a negligible impact on performance.
- Industry exposures, which are driven by the factor and ESG tilts, added to relative returns for the quarter. Particularly, an underweight to industrial and energy companies bolstered relative results as escalating trade tensions and concerns of slowing global economic growth weighed on the industries.
- The Fund now incorporates SmartCarbon™ into its investment process. Our proprietary, risk-based investment process manages exposure to companies with fossil fuel reserves on their balance sheets, replacing energy company holdings with a diversified basket of energy efficiency stocks. As a result, the Fund has become fossil fuel free. For more information, visit the SmartCarbon webpage and read our press release.
Performance(as of 12/31/19)
|Returns (%)||Average Annual Returns (%)|
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|ESG Beta Dividend Fund - Investor Class||2.91||7.33||25.85||25.85||12.84||-||-||12.34|
|ESG Beta Dividend Fund - Institutional Class||2.95||7.35||26.18||26.18||13.15||-||-||12.64|
|Russell 1000 Index||2.89||9.04||31.43||31.43||15.05||-||-||14.54|
|Lipper Equity Income Funds Index||2.88||6.50||26.38||26.38||11.18||-||-||10.82|
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.com
Figures include reinvested dividends, capital gains distributions and changes in principal value.
1The 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 5/1/2019 prospectus.ˆ
(as of 12/31/19)
|Total Relative Factor
Past performance is no guarantee of future results.
2Dividend 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 12/31/19)
|Market Cap (weighted avg.)∱||$244,762M||$266,348M|
|Number of Securities||160||996|
Top 10 Holdings
(as of 12/31/19)
Apple, Inc. 4.4%, Microsoft Corp. 4.0%, Johnson & Johnson 3.0%, Amazon.com, Inc. 2.8%, Cisco Systems, Inc. 2.5%, AT&T, Inc. 2.4%, Texas Instruments, Inc. 2.3%, Procter & Gamble Co., The 2.0%, Alphabet, Inc., Class A 2.0% and PepsiCo, Inc. 1.9%. Holdings are subject to change.
xThe Impax Sustainability Score is a proprietary ranking of companies’ environmental, social and governance (ESG) performance developed by Impax’s Sustainability Research Team. The scoring framework is shaped by the team’s collective experience and insights on how sustainability impacts financial performance. Learn more about the Impax Sustainability Score here.
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.
∞An Ex-Ante Beta is used for Funds with less than two years of performance history under its new mandate. The Ex-Ante Beta is calculated using a multi-factor risk model. Beta explains common variations in stock returns due to different stock sensitivities to the market relative to its underlying benchmark for the current period, not historical. 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.