Performance and Portfolio Update
- The Pax Large Cap Fund outperformed the S&P 500 Index† during the third quarter, with stock selection driving the outperformance.
- The S&P 500 Index returned 7.71% in third quarter, its best quarterly return in five years. Very strong second quarter company earnings that were reported in July and August powered the equity market higher, but another Federal Reserve rate increase and continued trade skirmishes cooled momentum in September.
- Technology, Health Care, Consumer Discretionary, and Industrials all contributed to the Fund’s strong performance in the quarter. Notable outperformers include Discovery Inc. (up 16%), Ingersoll-Rand (up 15%), and Eli Lilly (up 26%). Discovery has made good progress improving their television ratings and inclusion on emerging alternative distribution platforms. Ingersoll-Rand grew its revenues 9% in the last quarter while being a leader in tackling many of the world’s greatest environmental challenges. Eli Lilly announced the separation and initial public offering of its animal health business during the quarter.
- The Materials sector marginally detracted from performance during the quarter. Aggregates producer Vulcan Materials (-14%) reported a weaker EBITDA‡ ramp in the seasonally strong second quarter due to higher energy costs. We expect better results over the next year as these cost increases moderate, so we increased our weighting in Vulcan during the quarter.
- We believe the risk/reward for large-cap stocks is still constructive looking forward, but earnings growth will likely be more difficult in the quarters to come. 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 better performance over time as more investors focus on the opportunities and risks arising from the transition to a more sustainable economy.
Performance(as of 9/30/18)
|1-Month||Quarter||YTD||1 Year||3 Year||5 Year||10 Year||Since Inception1|
|Large Cap Fund - Investor Class||0.51||8.56||11.95||19.88||-||-||-||17.81|
|Large Cap Fund - Institutional Class||0.51||8.65||12.15||20.21||-||-||-||18.09|
|S&P 500 Index||0.57||7.71||10.56||17.91||17.31||13.95||11.97||17.66|
|Lipper Large-Cap Core Funds Index||0.62||7.35||9.34||16.21||16.37||12.45||10.88||16.42|
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 9/30/18)
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 9/30/18)
|Market Cap (weighted avg.)∱||$261,531M||$247,647M|
|Number of Securities||49||505|
Top Ten Holdings
(as of 9/30/18)
Amazon.com, Inc. 5.1%, Microsoft Corp. 4.7%, Apple, Inc. 4.4%, JPMorgan Chase & Co. 3.0%, IBM 2.8%, Ingersoll-Rand PLC 2.7%, Becton Dickinson & Co. 2.7%, Thermo Fisher Scientific, Inc. 2.7%, AT&T, Inc. 2.6% and Eli Lilly & Co. 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.
‡Earnings before interest, tax, depreciation and amortization (EBITDA) is a measure of a company’s operating performance.
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.