Performance and Portfolio Update

  • The Fund underperformed the benchmark Russell 1000 Index in the first quarter. The main drivers of the return difference were industry exposures. From a factor perspective, the factors used in the strategy construction had a slightly positive impact on relative returns.
  • Industry exposures, which are driven by the factor and ESG tilts, detracted from relative returns for the quarter. Particularly, an overweight position in the life, health, and multi-line insurance industry hampered relative results following news that Amazon, Berkshire Hathaway and JPMorgan Chase were collaborating on reducing healthcare costs.
  • The overweight towards quality factors contributed positively to relative results for the period. Particularly, the strategy’s exposure to companies with higher profitability was the largest style factor contributor.
  • The factor tilt towards higher value companies, as measured by Earnings Yield, detracted from relative results. The factor tilt towards companies with lower beta and higher earnings quality had a negligible impact.
  • Environmental, social and governance (ESG) factors, as measured by the Pax Sustainability Scorex, added to relative results for the quarter. The Fund overweights the portfolio towards companies with ESG strength. During the period, companies with stronger ESG profiles outperformed those with weaker ESG profiles.

Performance

(as of 6/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
ESG Beta Quality Fund - Individual Investor Class0.672.121.0313.519.2012.278.805.40
ESG Beta Quality Fund - Class A˜0.622.120.9813.549.2012.298.805.40
ESG Beta Quality Fund - Institutional Classƒ0.672.181.1713.819.4812.569.075.53
Russell 1000 Index0.653.572.8514.5411.6413.3710.20
Lipper Multi-Cap Core Funds Index0.373.162.3613.6010.0811.969.12

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.wpengine.com

Figures include reinvested dividends, capital gains distributions, and changes in principal value.

1The inception date for the Pax ESG Beta Quality Fund Institutional Class is April 2, 2007, the Individual Investor Class inception date is June 11, 1997 and the Class A shares inception date is May 1, 2013.

The performance information shown for Institutional Class shares represents the performance of the Individual Investor Class shares for the period prior to Institutional Class inception (April 2, 2007). 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. Institutional Class shares average annual return since April 2, 2007 is 7.95% (annualized).

Total annual Pax ESG Beta Quality Fund operating expenses, gross of any fee waivers or reimbursements, for Individual Investor Class, Class A, and Institutional Class shares are 0.90%, 0.90% and 0.65%, respectively as of 5/1/2017 prospectus.

The performance information shown for Class A represents the performance of the Individual Investor Class shares for the period prior to Class A inception. Expenses have not been adjusted to reflect the expenses allocable to Class A shares. Class A inception date return since May 1, 2013 is 12.44% (annualized). A 1.00% CDSC (contingent deferred sales charge) may be charged on any shares sold within 18 months of purchase over $1 million. POP (public offering price) reflects the maximum sales load for the Fund’s Class A Shares of 5.50%.

Performance
after sales charge

(as of 6/30/18)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
ESG Beta Quality Fund - Class A (Load)-4.92-3.49-4.567.327.1511.028.185.12

Factors


(as of 3/31/18)
Factor Exposure
Total Relative Factor
Contribution (%)

Past performance is no guarantee of future results.
2Beta 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.

Portfolio Characteristics

(as of 3/31/18)
FundBenchmark
Market Cap (weighted avg.)$164,293M$179,468M
Forward Price/Earnings16.2517.17
ROE25.5218.92
Beta
0.901.00
Number of Securities157975

 


Top Ten Holdings

(as of 6/30/18)
Amazon.com, Inc. 3.4%, Apple, Inc. 3.2%, MasterCard, Inc., Class A 2.5%, Microsoft Corp. 2.5%, Verizon Communications, Inc. 2.5%, Alphabet, Inc., Class A 2.4%, Texas Instruments, Inc. 2.4%, PepsiCo, Inc. 2.3%, Johnson & Johnson 2.5%, 3M Co. 2.2% and PNC Financial Services Group, Inc. 2.0%. Holdings are subject to change.

xThe Pax Sustainability Score is a proprietary ranking of companies’ environmental, social and governance (ESG) performance developed by Pax World’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 Pax Sustainability Score here.

Definitions

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 corporation’s 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 2 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 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.

PAX008018 (10/18)

David Loehwing, VP for Sustainable Investing, Pax World Funds

David Loehwing

Vice President, Sustainable Investing

David Loehwing is Vice President, Sustainable Investing at Impax Asset Management LLC and Pax World Funds.

He is responsible for environmental, social, and governance-related research on prospective and current investments and leads the construction and management of the Impax Sustainability Score. He is also a member of the Impax Gender Analytics Team.

David has worked in the sustainable investing field since 1998. Before joining the firm, Mr. Loehwing served as Senior Social Research Analyst at Citizens Advisers, and as a Senior Account Manager at the Investor Responsibility Research Center (IRRC). He is also a former member of the Evangelical Lutheran Church in America (ELCA) Advisory Committee on Corporate Social Responsibility (ACCSR) and the Sustainable Investment Research Analyst Network’s (SIRAN) steering committee. David is a graduate of Bowdoin College.

Recent blog posts

Ran Leshem

Aperio Group, Portfolio Manager, Pax ESG Beta® Quality Fund and Pax ESG Beta® Dividend Fund

Ran Leshem is a member of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund portfolio management team. At Aperio Group LLC (Aperio), subadviser of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund, Ran is Chief Investment Officer. He oversees the portfolio management and operations of Aperio’s US, foreign, and global products.

Ran has extensive experience in applying quantitative techniques and information technology to complex operational problems. Prior to joining Aperio in 2006, Ran was a Manager, Operating Strategy, at the Gap, Inc.

With Aperio co-authors Lisa Goldberg and Patrick Geddes, Ran was awarded a Harry M. Markowitz Distinction Award by the Journal of Investment Management for “Restoring Value to Minimum Variance” in 2014. He also co-authored “Optimizing Value” with Lisa Goldberg and Alan Cummings, which was published in The Journal of Portfolio Management in 2016. Along with Lisa Goldberg and Michael Branch, he wrote “Factoring Probability,” published in Risk-Based and Factor Investing in 2015.

Ran received his Bachelor of Science degree in Mathematics from the University of Waterloo, Canada, where he received the Hewlett Packard Award for academic excellence. He received his MBA from the University of California at Berkeley.

ALPS Distributors, Inc. is not affiliated with Aperio Group, LLC.

Recent blog posts

Michael Branch, CFA®

Aperio Group, Portfolio Manager, Pax ESG Beta® Quality Fund and Pax ESG Beta® Dividend Fund

Michael Branch is a Portfolio Research, Trading, and Analytics Associate at Aperio Group LLC (Aperio) and is a member of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund portfolio management team. Aperio serves as subadvisor of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund.

Prior to joining Aperio, Michael was a Fund Operations Specialist for California Investment Trust, a mutual fund company.

Michael co-authored “Factoring Probability” with Lisa Goldberg and Ran Leshem; it was published in Risk-Based and Factor Investing in 2015. He was the sole author of “The Case for Global Stock Portfolios,” published in the Journal of Indexes in 2011.

Michael received his Bachelor of Science in Finance from the University of Arizona. He holds the Chartered Financial Analyst designation and is a member of the CFA® Society of San Francisco.

CFA® is a trademark owned by the CFA Institute.

ALPS Distributors, Inc. is not affiliated with Aperio Group, LLC.

Recent blog posts

Robert Tymoczko

Aperio Group, Portfolio Manager, Pax ESG Beta® Quality Fund and Pax ESG Beta® Dividend Fund

Robert Tymoczko is a member of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend portfolio management team. At Aperio Group LLC (Aperio), subadviser of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund Robert is responsible for overseeing the day-to-day portfolio management and strategy implementation of all investment products.

Prior to joining Aperio, Robert was a Managing Partner at AlphaStream Capital Management, LLC, where he was responsible for quantitative research and portfolio management. Before AlphaStream, Robert was Lead Portfolio Manager and Co-Head of U.S. Quantitative Equity Products at Zurich Scudder Investments.

Robert received his Bachelor of Arts in Quantitative Economics from Stanford University and his MBA with concentrations in Finance and Econometrics from the University of Chicago.

ALPS Distributors, Inc. is not affiliated with Aperio Group, LLC.

Recent blog posts

Annie Tan

Aperio Group, Portfolio Manager, Pax ESG Beta® Quality Fund and Pax ESG Beta® Dividend Fund

Annie Tan is an Associate Portfolio Manager at Aperio Group LLC (Aperio) and a member of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund portfolio management team.

Aperio serves as subadviser of the Pax ESG Beta Quality Fund and Pax ESG Beta Dividend Fund. At Aperio, Annie is responsible for providing analytical support in the research, portfolio management, and trading of client portfolios.

Prior to Aperio, Annie was an investment analyst at Dragon Financial Group. She received her Bachelor of Arts in Economics from the University of California at Davis and her Master of Science in Financial Analysis from the University of San Francisco.

ALPS Distributors, Inc. is not affiliated with Aperio Group, LLC.

Recent blog posts

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