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*
1.80%
NAV*
$11.34
INCEPTION
February 6, 2017
MINIMUM INVESTMENT
$100,000
CUSIP
70472Q773
BENCHMARK
MSCI EAFE
NET EXPENSE RATIO(1)
0.94%
GROSS EXPENSE RATIO(2)
1.11%
*as of 11/20/2024
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 11/20/2024 |
Quarterly As Of 9/30/2024 |
1 Year As Of 9/30/2024 |
3 Years As Of 9/30/2024 |
5 Years As Of 9/30/2024 |
10 Years As Of 9/30/2024 |
Since Inception As Of 9/30/2024 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| 1.80% | 5.80% | 22.52% | 3.52% | 6.24% | N/A | 5.81% | 1.11% | 0.94% |
Calendar Year
| 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|---|
| 21.28% | -17.26% | 15.69% | 6.74% | 20.77% | -18.81% | 33.44% | 2.75% | -1.27% | 6.85% | 25.20% |
Portfolio
as of September 30, 2024
Top Ten Holdings
| Percentage Of Total Net Assets | 23.20% |
|---|---|
| Itochu Corporation | 2.40% |
| Smurfit Westrock plc | 2.40% |
| Bellway plc | 2.40% |
| Muenchener Rueckversicherungs-Gesellschaft | 2.30% |
| Canadian Tire Corporation | 2.30% |
| Hannover Rueck SE | 2.30% |
| LG Electronics Inc. | 2.30% |
| Next plc | 2.30% |
| Linde plc | 2.30% |
| Publicis Groupe | 2.20% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Consumer Discretionary | 20.60% |
| Financials | 18.40% |
| Materials | 13.90% |
| Industrials | 13.70% |
| Communication Services | 7.60% |
| Consumer Staples | 6.20% |
| Health Care | 6.00% |
| Information Technology | 5.40% |
| Energy | 3.80% |
| Real Estate | 2.00% |
| Cash and Other Assets (Net) | 2.40% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 86.20% |
|---|---|
| Japan | 15.50% |
| France | 10.90% |
| United Kingdom | 10.80% |
| South Korea | 10.50% |
| Canada | 9.40% |
| Germany | 9.30% |
| Norway | 6.20% |
| Ireland | 5.40% |
| Switzerland | 4.40% |
| Sweden | 3.80% |
Portfolio Characteristics
| Net Assets | $2,966,779,006 |
|---|---|
| Number Of Holdings | 61 |
| Percentage in Top 10 Holdings | 23.20% |
| Weighted Average Market Cap (Mil) | $44,869.13 |
| Annual Turnover | 21.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 97.60% |
| Cash and Other Assets (Net) | 2.40% |
Commentary
For the Quarter ended September 30, 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 5.69% at net asset value compared to 7.33% for the Index.
Market Conditions and Investment Strategies
With a more benign rate environment this quarter, we saw rotation out of tech companies and into tried-and-true cyclicals and a few defensives, where the Fund is more heavily weighted. However, Information Technology (IT) was still the biggest deterrent to performance, as the Fund was down much more than the benchmark. On a regional basis, the Fund outperformed in the United Kingdom, Japan, Switzerland, Netherlands and Norway. Holdings in South Korea, Italy and Belgium detracted.
On the backdrop of interest rate cuts, Financials shined on expectations for loan demand and cheaper cost of capital. Shinhan Financial Group had a second quarter earnings beat on better non-interest income with credit costs under control. Puerto Rican institution, Popular Inc., surprised the market with an aggressive capital return plan. Among Consumer Discretionary stocks, U.K. housebuilder Bellway PLC was up more than 30% after reporting better-than-expected annual results. Investors lauded Bellway’s organic growth objectives, which trumped acquisitive growth as it ended its bid to buy Crest Nicholson. Kia Corp. delivered record quarterly results; however, the stock declined on market concerns about Kia’s ability to maintain peak margins on the back of higher costs and lower sales volumes. All Consumer Staples holdings had double-digit gains, led by Koninklijke Ahold Delhaize and Barry Callebaut. Ahold had robust quarterly earnings and held firm to its 2024 guidance. Chocolatier Barry Callebaut was up as investors looked past the current supply challenges with the cocoa crop. In Communication Services, KDDI reported decent quarterly results, highlighting acquisitive and organic growth. Deutsche Telekom added new U.S. customers in the second quarter of 2024 via its U.S. subsidiary, T-Mobile.
In Industrials, Marubeni Corp declined on weak demand in agricultural products and foreign exchange impact. Germany’s Daimler Truck Holding cut unit sales guidance in Europe and Asia. Among materials, Methanex Corp. fell after the company agreed to acquire the methanol business of OCI Global for a little more than $2 billion. Following the news, Barclays downgraded the stock, citing concerns about operating reliability, increased leverage and investor rotation. Lundin Mining followed the copper price lower in the third
quarter, slumping after a substantial runup in in the preceding months. South Korean chip companies, Samsung Electronics and SK Hynix Inc., sunk on a potential AI slowdown and commodity chip prices.
Portfolio Changes
During the quarter, Polaris sold Toronto-Dominion Bank given the ongoing anti-money laundering investigation. Capital was re-allocated to two Japanese companies: ORIX Corp., a diversified financial services group and Macnica Holdings Inc., a semiconductor chip distributor.
Outlook
In a normalized interest rate environment, global economies should start to recover. We are already seeing signs of that in most of the developed world, while China is pushing stimulus measures. A recovery will be especially helpful for cyclical stocks, where the Fund is typically overweight. Our research pipeline continues to pinpoint a number of cyclicals, and a few defensives, that look promising. We will be adding a select number of names in the coming quarters, with the intent of enhancing the risk/return profile of the Fund.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2023 | $0.5297 | $0.0000 | $0.0000 |
| 2022 | $0.3848 | $0.0000 | $0.0000 |
| 2021 | $0.3433 | $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, 2025.
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.