Performance and Portfolio Update

  • The Fund underperformed the MSCI EAFE Index during the quarter, as momentum and high beta international developed stocks drove market returns. These conditions were unfavorable due to the Fund’s lower risk profile, a byproduct of the Fund’s ESG focus. The Fund’s Institutional Class (PXNIX) has produced 11% lower beta and 9% lower risk (as measured by standard deviation) than the EAFE Index over the trailing 3 years, ending December 31, 2017.
  • International developed markets, as represented by the MSCI EAFE Index, had strong absolute results for the fourth straight quarter, posting a 4.23% return, while underperforming the U.S. equity markets return of 6.64%, as represented by the S&P 500 index.Δ
  • The Fund’s ESG profile detracted from relative performance versus the MSCI EAFE Index during the quarter. The Fund’s large overweight to ESG Leaders detracted from relative performance, as did its underweight to the average- and lowest-rated groups. Longer term since the Fund’s inception, an overweight to the highest-rated ESG companies has contributed the most to relative performance.△△
  • In the fourth quarter, almost half of the Fund’s relative underperformance could be attributed to holdings not held in the Fund, since they did not meet minimum ESG thresholds to become a constituent of our Fund’s underlying MSCI EAFE ESG Leaders Index.
  • From a sector perspective, eight out of the 11 sectors produced negative relative results in the fourth quarter. Stock selection in Financials, driven by ESG leaders within Banks and Insurance, detracted from performance. Stock selection and an underweight allocation within the Energy sector, driven by Oil, Gas and Consumable Fuels companies hurt relative performance. In addition, the Materials sector and the Fund’s underweight to the Metals & Mining industry detracted from performance.
  • Stock selection within Telecommunications, Information Technology and Consumer Discretionary helped relative results in the fourth quarter, led by Diversified and Wireless Telecom, Communications Equipment and Household Durables.
  • On a regional basis, the European and Pacific regions detracted from relative performance versus the MSCI EAFE Index. Within Europe, ESG Leaders within the UK, Switzerland and Germany detracted, and within the Pacific region, Australia and Hong Kong produced negative relative results in Q4.


(as of 12/31/17)
1-MonthQuarterYTD1 Year3 Year5 Year10 YearSince Inception1
Pax MSCI EAFE ESG Leaders Index Fund - Individual Investor Class0.713.0123.0123.016.817.43-5.32
Pax MSCI EAFE ESG Leaders Index Fund - Institutional Class0.753.1023.3423.347.087.70-5.59
MSCI EAFE ESG Leaders (Net) Index1.043.4923.3723.377.928.35-6.18
MSCI EAFE (Net) Index1.614.2325.0325.037.807.901.945.58
Lipper International Large-Cap Core Funds Index1.403.5125.4625.467.627.451.605.26

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

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

1The inception date for the Pax MSCI EAFE ESG Leaders Index Fund Institutional Class is January 27, 2011 and the Individual Investor Class inception date is March 31, 2014.

As of 5/1/17 prospectus, total annual Pax MSCI EAFE ESG Leaders Index Fund operating expenses, gross of any fee waivers or reimbursements, for Individual Investor Class and Institutional Class shares are 0.80% and 0.55%, respectively.

Performance Attribution

ESG Ratings

(as of 12/31/17)
Average Active Weights (%)
3-month Relative Contribution (%)Since Inception 1/27/11
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 12/31/17)
Market Cap (weighted avg.)$56,974M$62,091M
Forward Price/Earnings16.4216.05
Number of Securities338928


Top Ten Holdings

(as of 12/31/17)
Novartis AG 2.2%, Roche Holding AG 2.2%, Novo Nordisk A/S, Class B 1.7%, Total SA 1.7%, SAP SE 1.7%, Commonwealth Bank of Australia 1.7%, GlaxoSmithKline PLC 1.5%, BASF SE 1.5%, Allianz SE 1.3% and Siemens AG 1.3%. Holdings are subject to change.


Standard Deviation measures a Fund’s variation around its mean performance; a high standard deviation implies greater volatility.
The Pax MSCI EAFE ESG Leaders Index Fund — Institutional Class (PXNIX) three-year beta is 0.89 compared to 1.00 for the MSCI EAFE Index. The Fund’s (PXNIX) three-year standard deviation is 10.81 compared to 11.83 for the MSCI EAFE Index. The minimum investment needed for investment in PXNIX is $250,000.
ΔThe S&P 500 Stock Index is an unmanaged index of large capitalization common stocks. One cannot invest directly in any index.
IVA stands for Intangible Value Assessment.
△△MSCI ESG Research evaluates companies’ ESG characteristics and derives corresponding ESG scores and ratings. Companies are ranked by ESG score against their sector peers to determine their eligibility for the MSCI ESG indices. MSCI ESG Research identify es the highest-rated companies in each peer group to meet the float-adjusted market capitalization sector targets. The rating system is based on general and industry-specific ESG criteria, assigning ratings on a 7-point scale from AAA (highest) to CCC (lowest).
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.
A historical Beta is used for Funds with greater than 2 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.

On 3/31/2014 Pax International Fund and Pax MSCI EAFE ESG Index ETF merged into the Pax MSCI International ESG Index Fund (the Fund), a passively managed index fund which seeks investment returns that closely correspond to the price and yield performance, before fees and expenses, of the MSCI EAFE ESG Index. Based on the similarity of the Fund to Pax MSCI EAFE ESG Index ETF, Pax MSCI EAFE ESG Index ETF (the Predecessor Fund) is treated as the survivor of the mergers for accounting and performance reporting purposes. Accordingly, all performance and other information shown for the Fund for periods prior to 3/31/2014 is that of the Predecessor Fund.

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.

PAX007670 (4/18)

Scott LaBreche

Director, Portfolio Analytics & Index Strategy Optimization, Impax Asset Management LLC Portfolio Manager, Pax Ellevate Global Women's Leadership Fund, Pax MSCI EAFE ESG Leaders Index Fund

Scott LaBreche is Director, Portfolio Analytics & Index Strategy Optimization at Impax Asset Management LLC, formerly Pax World Management LLC, and a Portfolio Manager of the Pax Ellevate Global Women’s Leadership Fund and the Pax MSCI EAFE ESG Leaders Index Fund. Across all Pax World Funds, Scott is responsible for fund research, quantitative ESG research, advanced analytics, risk oversight, fund optimization and board reporting, as well as overseeing performance and attribution.

Prior to joining the firm in 2007, Scott was a Securities Fund Analyst at Lincoln Financial Group. He has been in the mutual fund industry since 1999.

Scott holds a Bachelor of Science in Business Administration and a Masters of Business Administration with Advanced Certificate in Finance from Southern New Hampshire University.

Recent blog posts

Greg Hasevlat

Sustainability Research Analyst, Impax Asset Management LLC

Greg Hasevlat is a Sustainability Research Analyst at Impax Asset Management LLC and Vice President, Sustainable Investing at Pax World Funds.

As such, he is responsible for evaluating the environmental, social and governance (ESG) performance of companies for inclusion in the firm’s portfolios. He is also involved in shareholder and public policy engagement and coordinating the firm’s sustainability reporting. Greg is a member of the Impax Gender Analytics team.

Prior to joining the firm in December 2009, Greg was a Government Affairs Representative at a New Hampshire-based consulting firm. In that role, he represented clients from various industries before the New Hampshire legislature. Greg received a bachelor’s degree in English from the University of New Hampshire and an MBA from Southern New Hampshire University.

Recent blog posts

Steve Falci, CFA®

Chief Investment Officer, Impax Asset Management LLC
Executive Vice President, Pax World Funds

Steve Falci is Chief Investment Officer at Impax Asset Management LLC and Executive Vice President of Pax World Funds. Steve oversees the investment management of Pax World Funds, the development of fund strategy and the collaboration between investment analysis and environmental, social and governance-based research to enhance the firm’s sustainable investing strategy.

Steve has 30 years of experience in investment management. Prior to joining the firm, he served as Head of Strategy Development, Sustainable Investment at Kleinwort Benson Investors, where his duties included strategic direction, product development and identifying new market opportunities in the sustainable investment business. Steve previously served as Chief Investment Officer, Equities at Calvert Group and was a Principal and Senior Portfolio Manager at Mellon Equity Associates.

Steve serves on the board of directors of the US Forum for Sustainable and Responsible Investment (US SIF). He also serves on the Investment Committee for Mercy Investment Services. Steve has a Bachelor of Science in Economics and a Master of Business Administration from the Stern School of Business at New York University and a Master of Arts from Pittsburgh Theological Seminary. Steve is a CFA® charter holder.

CFA® is a trademark owned by the CFA Institute.

Recent blog posts

Pax World Investment Outlook: Fourth Quarter 2019

In this quarter’s commentary, we explain why there is reason for optimism despite recent public-policy setbacks on sustainability issues. Companies and investors have been stepping in to fill the void on a range of issues.

17 Oct 2019
Pax World Investment Outlook: Third Quarter 2019

In this quarter’s commentary, we consider how sustainability and competitiveness go hand-in-hand. Companies that embrace sustainability can improve their ability to compete today and over the long-term.

19 Jul 2019
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