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*
-0.87%
NAV*
$22.90
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 4/17/2024
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 4/17/2024 |
Quarterly As Of 3/31/2024 |
1 Year As Of 3/31/2024 |
3 Years As Of 3/31/2024 |
5 Years As Of 3/31/2024 |
10 Years As Of 3/31/2024 |
Since Inception As Of 3/31/2024 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| -0.87% | 3.29% | 14.66% | 0.81% | 4.30% | 3.39% | 5.91% | 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 December 31, 2023
Top Ten Holdings
| Percentage Of Total Net Assets | 24.30% |
|---|---|
| SK Hynix, Inc. | 2.70% |
| Publicis Groupe | 2.60% |
| Next plc | 2.50% |
| Samsung Electronics Company Limited | 2.50% |
| Vinci SA | 2.40% |
| Hannover Rueck SE | 2.40% |
| Muenchener Rueckversicherungs-Gesellschaft | 2.30% |
| Sony Group Corporation | 2.30% |
| Linde plc | 2.30% |
| Methanex Corporation | 2.30% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Consumer Discretionary | 19.70% |
| Financials | 18.50% |
| Industrials | 16.20% |
| Materials | 14.80% |
| Communication Services | 9.50% |
| Information Technology | 7.30% |
| Energy | 4.10% |
| Health Care | 3.90% |
| Consumer Staples | 3.20% |
| Real Estate | 2.00% |
| Cash and Other Assets (Net) | 0.80% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 85.70% |
|---|---|
| France | 12.90% |
| Canada | 12.30% |
| South Korea | 12.10% |
| Japan | 11.20% |
| United Kingdom | 10.70% |
| Germany | 9.00% |
| Norway | 6.80% |
| Ireland | 4.50% |
| Sweden | 3.90% |
| Switzerland | 2.30% |
Portfolio Characteristics
| Net Assets | $3,143,781,452 |
|---|---|
| Number Of Holdings | 59 |
| Percentage in Top 10 Holdings | 24.30% |
| Weighted Average Market Cap (Mil) | $48,464.10 |
| Annual Turnover | 15.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 99.20% |
| Cash and Other Assets (Net) | 0.80%% |
Commentary
For the Quarter ended December 31, 2023
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 11.59% at net asset value compared to 10.47% for the Index.
Market Conditions and Investment Strategies
Three sectors contributed most to gains, including Consumer Discretionary, Industrials and Financials. Other cyclicals, Information Technology (IT) and Materials, added measurably. Smaller absolute gains were noted in defensive sectors, including Energy, Consumer Staples and Health Care. Holdings in France, the United Kingdom, Canada and Germany topped performance, with notable double-digit returns from off-benchmark countries including South Korea, Puerto Rico and China. Single stock holdings in the Netherlands and Italy detracted.
The rate-sensitive Consumer Discretionary sector had a strong showing in the fourth quarter, as consumers spent in the runup to the holidays. A half dozen sector holdings had double-digit gains. Among Industrials, China’s Weichai Power cited recovery in the heavy-duty truck market boosted by exports and domestic demand. Morgan Stanley promoted Daimler Truck as one of its favorite European auto stocks for 2024.
Financials were up across the board. Puerto Rican bank, Popular Inc., managed to beat street EPS estimates for the third quarter while German reinsurers capitalized on hard market pricing and better returns on their investment portfolios.
Materials sector stalwart, Smurfit Kappa Group, was purchased as a “backdoor” investment into Consumer Staples, but at a much better valuation. The decision proved fruitful, as the food/beverage packaging company led Materials sector gains this quarter. Commodity suppliers also fared well, as expected lower interest rates in 2024 may minimize costs of carrying inventories and boost commodity prices.
Instead of considering pricey AI players, we invested in value “derivatives” that serve the AI market behind the scenes. Memory chip maker SK Hynix was up more than 25% for the quarter, noting improvement in DRAM pricing and AI demand for its very advanced high bandwidth memory chips. Samsung Electronics capitalized on the same.
Among detractors, Norwegian fertilizer manufacturer Yara International posted lackluster results, as profitability dropped on reduced margins. Irish drug maker, Jazz Pharmaceuticals, had mixed news as its key product, Xywav, faced generics competition. Grocer Ahold Delhaize noted moderating growth and margins as consumers tighten their belts.
Portfolio Changes
During the quarter, we exited Honda Motor Co., Amcor PLC, and Taylor Wimpey PLC. The Fund now has ownership of Sandoz shares due to a Novartis spin-off. A new position was initiated in ENI SpA, the Italian oil and gas company with a diverse geographic footprint.
Outlook
The single biggest influence on equity markets this past year was the rise in interest rates. The markets whipsawed in the fourth quarter, as the Fed signaled rate cuts in the second half of 2024. However, we suspect central banks will keep rates at more stabilized levels especially in real, after-inflation terms, departing from the ill-advised period of artificially low rates. More appropriately priced cost of capital has far-reaching implications, and is particularly beneficial for value stocks.
We keep macroeconomic events in sight as we update our Fund portfolio, seeking to enhance the risk/return profile with cash-flow generative companies purchased as excellent values. We expect that such positioning will lead to continued outperformance as we enter 2024.
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.