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*
7.14%
NAV*
$24.75
INCEPTION
May 15, 1998
MINIMUM INVESTMENT
$2,500
CUSIP
70472Q708
BENCHMARK
MSCI EAFE
NET EXPENSE RATIO(1)
1.42%
GROSS EXPENSE RATIO(2)
1.52%
*as of 7/15/2024
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 7/15/2024 |
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) |
|---|---|---|---|---|---|---|---|---|
| 7.14% | 0.13% | 12.79% | 0.42% | 3.98% | 3.21% | 5.86% | 1.52% | 1.42% |
Calendar Year
| 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|---|
| 19.89% | -17.10% | 8.35% | 2.65% | 17.93% | -13.27% | 25.24% | 4.54% | -0.67% | -5.23% | 27.57% |
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 March 31, 2024
The Pear Tree Polaris Foreign Value Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the MSCI EAFE Index (the “Index”). The Fund had a return of 3.29% at net asset value compared to 5.93% for the Index.
Market Conditions and Investment Strategies
Absolute positive gains were noted across a majority of sectors, led by Materials, Industrials, Financials, and Communication Services. Holdings in Energy and Health Care were in negative territory. From a country perspective, the portfolio outperformed in Germany, United Kingdom, Sweden and Belgium, to name a few. Detractors included Norway, Canada, Italy and Thailand.
The law of supply and demand played out in copper market prices. The “electrification of everything” and a resurgent Chinese economy drove demand, but supply side constraints were an equally, if not more important, determinant of pricing. Pure copper players like Lundin Mining and Antofagasta PLC jumped more than 20% for the quarter. Among sector detractors, Canadian methanol producer Methanex reported a delay in the startup of its Geismer 3 project and repairs at its Egypt facility. In an interview with CNBC, Yara International’s CEO stated “volatility is the new normal” in the food system.
Industrial stocks, Daimler Truck Holding and Weichai Power Co, each had double-digit gains for the quarter. Daimler Truck hosted an investor day, showcasing its North American market growth with a roll-out of electric delivery trucks in California. Heavy truck diesel engine manufacturer Weichai posted strong net profits and increased revenue despite a weaker global and local economy.
The Financial sector was boosted by two German reinsurance companies, Munich Re and Hannover Re, as they continued to advance on a firmer price environment. Shinhan Financial was up more than 10%, as the South Korean institution implemented a number of strategic moves.
SK Hynix and Samsung Electronics could be considered artificial intelligence “derivatives”, capitalizing on the space without the high price tag associated with some of the mega-cap names. An Information Technology (IT) detractor, OpenText Corp. declined as investors took profits following a stock rebound in December and January.
AI was the driving force behind very different results for two of our portfolio holdings. Publicis Groupe was up markedly after announcing solid fiscal year-end results and promoting a new strategy to become the industry’s first AI-powered Intelligent System to be built in-house. Teleperformance declined on renewed concerns that generative AI will disrupt the French call center’s business.
Two Consumer Discretionary stocks detracted. Japan’s Sony Group Corp. saw a decline on earnings, with lower-than-expected results from their gaming division and flagship PlayStation consoles. LG Electronics reported inline sales, but operating profits disappointed on higher marketing costs and expenses.
Portfolio Changes
New purchases included Takeda Pharmaceutical Co. Ltd., a Japanese-based global pharmaceutical company, with a diversified product portfolio that branches into gastroenterology, rare diseases, immunology and oncology; and Korean retailer F&F Co. Ltd., which has licensing deals with Major League Baseball, Discovery and TaylorMade Golf brands. There were no complete sales.
Outlook
The timing of rate adjustments remains in question; it will be a fine balance taking into account strong global GDP growth and employment rates, geopolitical risks and election year stimulus packages among other metrics. At Polaris, we continue to perform fundamental bottom-up research, which we expect will ultimately drive differential equity returns.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2023 | $0.4349 | $0.0000 | $0.0000 |
| 2022 | $0.2965 | $0.0000 | $0.0000 |
| 2021 | $0.2368 | $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.