Pear Tree Polaris Foreign Value Fund
The PEAR TREE POLARIS FOREIGN VALUE FUND provides investors with the opportunity to participate in the growth potential of companies predominantly located in developed foreign countries.
Investment Process
The Fund will generally own stocks of 50 to 125 non-U.S. companies located in the countries comprising the Morgan Stanley Europe, Australasia and Far East (EAFE) Index. In addition, the Fund may also invest a portion of its assets in emerging markets. The diversification within the Fund, coupled with the fact that the operation of the Fund’s investment model will generally lead the Fund to be invested in 15 or more countries, reduces the likelihood that performance of a single country will significantly impact the Fund’s return.
Buy and Sell Discipline
The investment process for the Fund combines both quantitative and fundamental techniques. The Fund’s approach is primarily “bottom up,” searching for individual stocks with strong, undervalued cash flows, regardless of location or industry. The Fund uses proprietary models to rank countries and industries on the basis of value and to narrow a universe of 40,000 companies down to 300 to 500 for further considerations. The Fund supplements the screening process by performing in-depth financial and fundamental analysis.
Portfolio Management
The Fund is managed by Polaris Capital Management, LLC, a Boston, Massachusetts money manager that specializes in the management of global, international, and domestic equity portfolios. Polaris brings over 35 years of investment experience to the Fund.
Fund Overview
YTD RETURN*
5.83%
NAV*
$24.32
INCEPTION
December 18, 1998
MINIMUM INVESTMENT
$1,000,000
CUSIP
70472Q807
BENCHMARK
MSCI EAFE
NET EXPENSE RATIO(1)
1.05%
GROSS EXPENSE RATIO(2)
1.27%
*as of 7/26/2024
Investment Professionals
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Sub-Advisor
Polaris Capital Management, LLC
Polaris is a leading global value equity manager, serving the investment needs of institutions and individuals since 1995. At Polaris Capital Management, we have a disciplined approach to investing in undervalued companies around the world, regardless of country, industry or market capitalization.
Portfolio Managers
Bernard R. Horn, Jr.
Sumanta Biswas, CFA
Bin Xiao, CFA
Jason Crawshaw
Performance
| YTD As Of 7/26/2024 |
Quarterly As Of 6/30/2024 |
1 Year As Of 6/30/2024 |
3 Years As Of 6/30/2024 |
5 Years As Of 6/30/2024 |
10 Years As Of 6/30/2024 |
Since Inception As Of 6/30/2024 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| 5.83% | 0.17% | 13.17% | 0.78% | 4.36% | 3.56% | 6.99% | 1.27% | 1.05% |
Calendar Year
| 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|---|
| 20.34% | -16.81% | 8.75% | 3.10% | 18.30% | -12.93% | 25.69% | 4.78% | -0.37% | -5.00% | 27.92% |
Portfolio
as of March 31, 2024
Top Ten Holdings
| Percentage Of Total Net Assets | 24.20% |
|---|---|
| Daimler Truck Holding AG | 2.70% |
| Lundin Mining Corporation | 2.70% |
| SK Hynix, Inc. | 2.60% |
| Linde plc | 2.40% |
| Smurfit Kappa | 2.40% |
| Publicis Groupe | 2.40% |
| Samsung Electronics Company Limited | 2.30% |
| Shinhan Financial Group Co., Limited | 2.30% |
| Michelin (CGDE) | 2.20% |
| TotalEnergies SE | 2.20% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Consumer Discretionary | 19.50% |
| Financials | 17.80% |
| Materials | 15.30% |
| Industrials | 14.60% |
| Communication Services | 8.70% |
| Information Technology | 6.80% |
| Health Care | 5.80% |
| Energy | 4.10% |
| Consumer Staples | 3.70% |
| Real Estate | 2.00% |
| Cash and Other Assets (Net) | 1.70% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 85.90% |
|---|---|
| South Korea | 13.00% |
| Japan | 12.50% |
| Canada | 12.20% |
| France | 11.60% |
| United Kingdom | 10.10% |
| Germany | 9.20% |
| Norway | 6.10% |
| Ireland | 5.30% |
| Sweden | 3.60% |
| Italy | 2.30% |
Portfolio Characteristics
| Net Assets | $3,100,916,386 |
|---|---|
| Number Of Holdings | 61 |
| Percentage in Top 10 Holdings | 24.20% |
| Weighted Average Market Cap (Mil) | $48,547.37 |
| Annual Turnover | 15.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 98.30% |
| Cash and Other Assets (Net) | 1.70% |
Commentary
For the Quarter ended June 30, 2024
The Pear Tree Polaris Foreign Value Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the MSCI EAFE Index (the “Index”). The Fund had a return of 0.13% at net asset value compared to (0.17%) for the Index.
Market Conditions and Investment Strategies
The Fund’s outperformance was due to holdings within Materials, Information Technology, Consumer Staples and Consumer Discretionary. Holdings within Communication Services, Industrials and Health Care hampered results. Geographically, a majority of countries added to gains; contributors included an out-of-benchmark allocation in South Korea, along with holdings in Ireland, Switzerland and Singapore. Canada, Germany and France detracted.
Copper producer Lundin Mining spearheaded Material sector gains. Copper prices have been on an upward trajectory since the end of 2023, increasing over 20% from mid-February to late May. Canadian methanol producer Methanex posted strong results, as methanol prices ticked higher.
SK Hynix gained in excess of 25% for the quarter, dominating the high-bandwidth memory market (crucial for AI applications) while noting good price momentum in traditional DRAM and NAND markets. At Open Text Corp., guidance was lowered and earnings fell short of expectations.
Greencore Group was among the top five portfolio contributors for the quarter, up more than 35% after posting impressive operating income in its first half 2024 results. Operating margins also rose as cost inflation eased and efficiency measures boosted profitability.
Consumer Discretionary highlights were Kia Corp. and LG Electronics, both of which posted double-digit gains. Kia Corp. and Hyundai Motor Company are working with Exide Energy to equip future EVs in the Indian market with LFP batteries. LG Electronics posted solid earnings as incentives dropped, raw material costs leveled off and product mix funneled to higher margin sales. Magna International declined after it adjusted its 2024 outlook, premised on no additional Fisker Ocean production (Fisker filed for bankruptcy protection) and lower sales.
Overall Industrial sector results were middling on the back of Daimler Truck, which dealt with a more normalized North American market post-pandemic. Even as subdued freight markets weigh on orders, build slots are largely filled through the third quarter of 2024. VINCI SA, the French concessions and construction company, reported robust first quarter 2024 results and reaffirmed guidance. However, the stock trended down 15%; we can ascertain no reason for the decline other than geopolitical risk in the country.
In Health Care, Swiss pharma Novartis AG raised its forecast as sales of blockbuster medicines for heart disease and psoriasis outpaced expectations, giving the stock its biggest boost in nine months. On the opposite spectrum, Jazz Pharmaceuticals, an Irish biopharmaceutical company, reported softer than expected sales due to patients’ slow transition from Xyrem to clinically-superior Xywav.
Portfolio Changes
China’s Weichai Power Company, which primarily makes diesel engines for trucks, was sold after a strong run; we booked healthy profits. One new purchase was Swiss-based Barry Callebaut AG, the world’s leading manufacturer of high-quality chocolate and cocoa products.
Outlook
Inflation is slowly grinding lower. We anticipate that nominal interest rates will remain above inflation, which should create a normalized positive real interest rate environment favorable to more consistent equity and bond market behavior. We are tailoring the portfolio with cyclicals with defensive characteristics, while adding to traditionally-defensive sectors including Health Care and Energy.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2023 | $0.5217 | $0.0000 | $0.0000 |
| 2022 | $0.3763 | $0.0000 | $0.0000 |
| 2021 | $0.3351 | $0.0000 | $0.0000 |
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost.
Before investing, carefully consider the Fund's investment objectives, risks, charges and expenses. For this and other information obtain the Fund's prospectus or, if available, the Fund's summary prospectus by calling (800) 326-2151 or by clicking the Literature and Forms section of this website to view or download a prospectus or, if available, a summary prospectus. Please read the prospectus carefully before you invest or send money.
1, 3, 5, and 10Yr performance numbers quoted are average annual total returns. Performance numbers quoted under one year are cumulative.
Polaris Capital began subadvising the Pear Tree Small Cap Fund on January 1, 2015.
The Pear Tree Essex Environment Opportunities Fund (the “Fund”) is the successor to the investment performance of the Essex Environmental Opportunities Fund (“Predecessor Fund”) as a result of the reorganization of the Predecessor Fund into the Environmental Opportunities Fund on September 1, 2021. Performance information shown prior to the close of business on August 31, 2021 is that of the Predecessor Fund’s for the Fund’s Ordinary Shares and Institutional Shares.
Expense Ratios Disclosure
1. Expense Ratio (Gross)
The gross expense ratio is the total operating expense from the class of shares of the fund stated as a percent of the fund's total net assets as disclosed in the fund’s most recent prospectus before waivers or reimbursements.
2. Expense Ratio (Net)
Net Expense Ratio is the total annual operating expense from the class of shares of the funds stated as a percent of the fund's total net assets as disclosed in the fund’s most recent prospectus after any fee waiver and/or expense reimbursements that will reduce any fund operating expenses until July 31, 2024 for all funds except Pear Tree Polaris International Opportunities Fund whose net expense ratio will expire on September 30, 2024.
Risk Disclosure
Pear Tree Polaris Foreign Value
Pear Tree Polaris Foreign Value Small Cap
Pear Tree Polaris International Opportunities
Pear Tree Polaris Small Cap
Pear Tree Essex Environmental Opportunities
Foreign and Emerging Market Risk. Foreign markets, particularly emerging markets, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market, or economic developments and can perform differently from the U.S. market. Emerging markets can be subject to greater social, economic, regulatory, and political uncertainties and can be extremely volatile.
Small Cap Investing. The value of securities of smaller, less well-known issuers can perform differently from the market as a whole and other types of stocks and can be more volatile than that of larger issuers.