Performance and Portfolio Update
- The Fund underperformed the S&P 500 Index† slightly in the first quarter. Contrary to prior quarters, the Fund’s performance relative to the Index was driven less by stock selection, which was positive in the quarter, and more by sector allocation, which was negative.
- The S&P 500 Index increased by 13.7% in the first quarter of 2019, gaining back a substantial portion of the drop experienced during the previous quarter. The main turning point for the stock market was the announcement of a halt of Federal Fund rate increases by the Federal Reserve. This change in policy, coupled with fourth quarter 2018 earnings results that were better than feared, led investors to bid up risk assets during the quarter.
- Turning to attribution, most of the Fund’s underperformance is related to sector allocation. The Fund’s slight overweight to Healthcare stocks and slight underweight to Technology stocks were headwinds in the current quarter. The worst performing sectors were Communication Services, where notably Walt Disney Company rose only 1%, and Information Technology where an underweight to Semiconductors and Semiconductor Equipment hurt relative performance.
- The Fund’s best performing sectors were Consumer Discretionary (PVH Corp. up 31%, Aptiv PLC up 29%) and Financials (Voya Financial, Inc up 24%).
- The rest of 2019 will likely bring many cross-currents for investors to consider. We expect that continued uncertainty around geopolitical events will likely cause more market volatility throughout the year. We expect the slowdown in earnings growth to be most pronounced in the first quarter, with modest recovery later in the year. Overall, we view the risk/reward to stocks to be roughly balanced for the rest of the year, and we continue to find attractive investment ideas across multiple sectors.
- We remain focused on bottom-up stock selection, while avoiding large sector over- and under-weights. We believe our ESG integration approach will serve as a “flywheel” to drive performance over time as investors focus on the opportunities and risks arising from the transition to a more sustainable economy.
Performance(as of 3/31/19)
|Returns (%)||Average Annual Returns (%)|
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Large Cap Fund - Investor Class||1.35||13.05||13.05||6.98||-||-||-||11.61|
|Large Cap Fund - Institutional Class||1.46||13.16||13.16||7.33||-||-||-||11.89|
|S&P 500 Index||1.94||13.65||13.65||9.50||-||-||-||12.69|
|Lipper Large-Cap Core Funds Index||1.38||12.52||12.52||8.05||-||-||-||11.44|
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 paxstaging.wpengine.com
Figures include reinvested dividends, capital gains distributions, and changes in principal value.
1The inception date for the Pax Large Cap Fund Institutional Class and the Investor Class is December 16, 2016.
As of 5/1/18 prospectus, total annual Pax Large Cap Fund operating expenses, gross of any fee waivers or reimbursements (excluding Acquired Fund fees and expenses), for Investor Class and Institutional Class shares are 0.95% and 0.70%, respectively.
(as of 3/31/19)
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 3/31/19)
|Market Cap (weighted avg.)∱||$252,522M||$230,753M|
|Number of Securities||47||504|
Top 10 Holdings
(as of 3/31/19)
Microsoft Corp. 5.4%, Amazon.com, Inc. 4.5%, Apple, Inc. 4.1%, Ingersoll-Rand PLC 3.2%, Merck & Co., Inc. 3.2%, Visa, Inc., Class A 2.8%, Alphabet, Inc., Class C 2.7%, Alphabet, Inc., Class A 2.7%, JPMorgan Chase & Co. 2.7% and IBM 2.5%. Holdings are subject to change.
†The S&P 500 Stock Index is an unmanaged index of large capitalization common stocks. One cannot invest directly in any index.
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 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.