What Are Pax World Mutual Funds?

Definition & Examples of Pax World Mutual Funds

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Pax World Funds are mutual funds that affirm the shift to a sustainable global economy in their investment approach. They offer people the option to invest their money in funds made up of environmentally sound firms.

Learn how Pax World Funds work and whether they're the right option for you.

What Are Pax World Mutual Funds?

Pax World Funds is a group of 11 funds advised by the London-based sustainable investment firm Impax Asset Management LLC and distributed by ALPS Distributors, Inc. The funds are grouped and managed with an eye toward the risks and rewards brought by a move to a green economy.

How Pax World Mutual Funds Work

In 1971, the Pax Fund (now the Pax Sustainable Allocation Fund) launched as the first public fund in the U.S. to invest with issues of sustainability in mind. Under the scope of Impax Asset Management, the Pax World Funds group has kept its mission to bolster risk-adjusted returns for people amidst the move to a more sustainable world economy.

To that end, all of the funds have environmental, social, and governance (ESG) factors along with financial factors in their approach. This approach is focused on building portfolios and managing funds. It aims to lower the risks of such a move and make the most of the rewards to get the best medium- to long-term returns for owners. Funds offer both investor and institutional share classes. Some also offer Class-A shares. As a boon to investors, the funds are no-load, and you can begin to invest with as little as $1,000.

The goals, asset allocation, stocks and bonds that make up the fund, management style, and ESG and financial factors that are brought to each fund vary. You should choose your fund with the mix of traits that best suits your goals. For instance, if you prize steady fixed income over long-term growth, look at the Pax Sustainable Allocation Fund, which maintains no more than 75% of its mix in equities.

Unlike load funds, no-load funds don't charge a fee to buy or sell them.

Types of Pax World Mutual Funds

Pax World Funds includes 11 funds in total. Each one offers unique traits that appeal to a diverse group of investors.

Pax Sustainable Allocation Fund

Once known as the Pax World Balanced Fund, this was the first fund to factor in social and financial standards in its approach. The fund keeps 50–75% of its assets in equities and 25–50% in debt. The main goal is to seek income and conserve principal. A second goal is to see a long-term growth of wealth.

Pax World Large Cap Fund

This fund seeks the long-term growth of cash. With that aim in mind, it invests at least 80% of its net assets in equities (such as common stocks and preferred stocks) of firms with a market cap in the range of the S&P 500. Because it doesn't stick to only one type of asset, its holdings may include growth stocks, value stocks, or both.

The large-cap fund and other Pax World Funds don't invest in firms that mine or refine of fossil fuels.

Pax World Small Cap Fund

This small-cap fund strives to meet its goal of long-term growth by investing in firms that fall within the range of the Russell 2000 Index. The funds place at least 80% of net assets into common stocks, preferred stocks, and assets that convert into these types of stocks, including growth and value stocks.

Pax ESG Beta Quality Fund

To meet its goal of long-term wealth growth, this fund uses a "smart beta" or factor investment plan that looks at both ESG and financial factors but gives weight to large-cap firms with a high level of quality. The fund gives more weight to firms with high ESG scores and profits, coupled with low risk.

Pax ESG Beta Dividend Fund

This fund has income and wealth growth as its main goal. As with the Pax ESG Beta Quality Fund, this fund follows a "smart beta" plan that has both ESG and financial factors but adds more weight to certain factors. In this case, the fund invests 80% of its net assets in dividend-paying equities of mainly large-cap domestic firms with high ESG scores and dividends.

Pax Global Opportunities Fund

This fund seeking long-term cash growth invests at least 80% of its net assets in firms that the fund manager believes will profit from the move to a green economy. As such, its holdings are mostly the stocks of firms whose business models have put them in a place to weather economic shifts.

Pax Global Environmental Markets Fund

This fund seeks long-term capital growth by putting 80% of its net assets in firms focused on making the environment better through things such as alternative energy, energy efficiency, pollution control, and waste management. The fund invests in both domestic and emerging markets and in both growth and value stocks.

Pax Ellevate Global Women's Index Fund

This fund is set up to track the returns of the Global Women’s Leadership Index and the risk profile of the Women’s Index. It uses an approach that weighs gender and leadership values. As such, it invests at least 80% of all assets in the securities of the Women’s Index and in American, Global, and Euro Depositary Receipts that comprise the stocks and bonds of the index.

Pax MSCI EAFE ESG Leaders Index Fund

This funds tracks the returns of the MSCI EAFE ESG Leaders Index, created by MSCI, Inc. It invests 80% of its total assets in the stocks and bonds of that index, along with American, Global, and Euro Depositary Receipts which make up the index's assets. The index mainly includes large- and medium-cap firms in emerging world markets.

Pax Core Bond Fund

This fund seeks to create income and conserve principal. At least 80% of its net assets are in bonds, including debt securities like mortgages and bonds. Bonds are investment-grade, equal to a Standard and Poor's rating of BBB- or higher. The fund holds a low amount of high-yield ("junk") bonds.

Pax World High Yield Bond Fund

This high-yield bond fund's main goal is to seek high current income. Capital gain is its other goal. At least 80% of its assets are in junk bonds. These bonds are rated below BBB- by Standard & Poor’s Ratings Group or below Baa3 by Moody’s.

Are Pax World Mutual Funds Worth It?

These funds are a good option for people who want to invest their money where it will aid in social and green progress.

They also hold broad appeal as they cater to a wide range of goals. Whether you desire income or long-term money growth, there's a fund in the group that should fit your goals. And the low starting money that is needed to invest and lack of loads mean that you don't have to pay large sums of cash upfront to profit from the sustainable boom that is upon us.

Key Takeaways

  • Pax World Funds are a group of funds that invests with the shift to a green economy in mind.
  • The funds come with no load and you only need $1,000 to get started.
  • The 11 funds in the group range from growth funds to income funds.