Pear Tree Polaris Foreign Value Small Cap Fund
The PEAR TREE POLARIS FOREIGN VALUE SMALL CAP FUND provides investors with the opportunity to participate in the growth potential of small cap companies located in foreign countries. A small cap company will generally be a company with a market capitalization from $50 million to $5 billion.
Investment Process
The Fund will generally own 50 to 100 stocks of non-U.S. companies located in Europe, Australia and the Far East. In addition, the Fund may also invest in companies located 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 foreign markets, reduces the likelihood that negative 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 over 30,000 companies down to 400 to 600 for further consideration. 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*
5.51%
NAV*
$13.99
INCEPTION
May 1, 2008
MINIMUM INVESTMENT
$1,000,000
CUSIP
70472Q500
BENCHMARK
MSCI ACWI ex. US SMALL CAP
NET EXPENSE RATIO(1)
1.04%
GROSS EXPENSE RATIO(2)
1.26%
*as of 5/31/2023
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 5/31/2023 |
Quarterly As Of 3/31/2023 |
1 Year As Of 3/31/2023 |
3 Years As Of 3/31/2023 |
5 Years As Of 3/31/2023 |
10 Years As Of 3/31/2023 |
Since Inception As Of 3/31/2023 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| 5.51% | 7.16% | -5.65% | 16.35% | 1.87% | 6.10% | 5.87% | 1.26% | 1.04% |
Calendar Year
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|---|---|---|
| -17.30% | 15.56% | 6.66% | 20.71% | -18.77% | 33.43% | 2.75% | -1.27% | 6.85% | 25.20% | 27.52% |
Portfolio
as of March 31, 2023
Top Ten Holdings
| Percentage Of Total Net Assets | 27.00% |
|---|---|
| Elis S.A. | 3.20% |
| Technip Energies N.V. | 3.10% |
| Tecnoglass, Inc. | 2.80% |
| D'Ieteren S.A. | 2.80% |
| Hexpol AB | 2.80% |
| Equatorial Energia S.A. | 2.60% |
| Sanwa Holdings Corporation | 2.50% |
| Thanachart Capital PCL | 2.50% |
| Loomis AB, Class B | 2.40% |
| Glanbia plc | 2.30% |
Sector Weightings
| Percentage Of Total Net Assets | 100.0% |
|---|---|
| Industrials | 23.1 |
| Financials | 19.2 |
| Consumer Discretionary | 18.4 |
| Information Technology | 8.1 |
| Consumer Staples | 7.9 |
| Materials | 7.6 |
| Utilities | 6.7 |
| Energy | 3.1 |
| Communication Services | 1.9 |
| Real Estate | 1.3 |
| CASH + other assets (net) | 2.7 |
Top Ten Country Allocations
| Percentage Of Total Net Assets | |
|---|---|
| Japan | 16.7 |
| United Kingdom | 14.9 |
| France | 8.5 |
| Sweden | 6.4 |
| Ireland | 5.5 |
| Thailand | 4.8 |
| Taiwan | 4.7 |
| Norway | 4.1 |
| Singapore | 3.8 |
| Denmark | 3.8 |
Portfolio Characteristics
| Net Assets | $1,000,595,294 |
|---|---|
| Number Of Holdings | 64 |
| Percentage in Top 10 Holdings | 27.00% |
| Weighted Average Market Cap (Mil) | $2,567.04 |
| Annual Turnover | 29.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.0% |
|---|---|
| Equity Securities | 97.30% |
| Cash and Other Assets (Net) | 2.70% |
Commentary
For the Quarter ended March 31, 2023
The Pear Tree Polaris Foreign Value Small Cap Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the MSCI ACWI ex USA Small Cap Index (the Index”). The Fund had a return of 7.00% at net asset value compared to 4.81% for the Index.
Market Conditions and Investment Strategies
The Fund had absolute gains in 9 of 10 invested sectors, led by double-digit results in Industrials and Energy. Strong returns
in overweight sectors, including Consumer Discretionary, Consumer Staples and Utilities also added to outperformance.
Communication Services, the sole sector in negative territory, was hampered by lackluster results from Future Inc. At the country
level, most European holdings were up with France, Sweden, Ireland, Denmark and Germany contributing measurably, while Asian
results were mixed. The largest detractors were Norway and the U.K., where the Fund was overweight.
Technip Energies, a French energy engineering company, was the top contributor; the company was a new buy in the fourth
quarter of 2022. Technip had solid momentum in its New Energy order book, partnering with Baker Hughes and Shell on
energy construction that lower emissions. The company also landed sizeable project management/engineering awards with
Middle East oil companies. Among Industrials, Elis SA and Tecnoglass Inc. both posted gains in excess of 30%, marking another
consecutive quarter of impressive returns. French laundry firm Elis shared upbeat 2023 guidance, expecting to capitalize on the
post-pandemic reopening of hotel/office services in combination with its resilient hospital/uniform business. Tecnoglass released
strong quarterly results, concentrating on lucrative geographies (San Francisco, Texas and Florida); a strong supply chain helped
usurp business from its competitors.
Among detractors, Lancashire Holdings posted a loss in 2022 on higher catastrophes; however, forward-looking projections are
positive, backed by strong pricing barring above average losses. Canada’s goeasy was down when the federal government capped
the annual interest rate on loans at 35% from the previously allowable 47%. The company still expects earnings growth even
with this new policy. In Consumer Discretionary, Nature Holdings reported lower earnings on weak Korean domestic consumption
and costs related to new brand launches. Halfords Group, the U.K.’s largest bicycle retailer, issued a weak trading report, pointing
to labor shortages and cost pressures amid slack demand for higher-priced discretionary spends.
Portfolio Changes
During the quarter, the Fund exited Aecon Group, which was weighed down by issues at four large fixed-price legacy projects.
Nomad Foods lost its luster, as the cost-of-living crisis turned consumers from branded to private label foods; the stock was sold
on lower sales/volumes coupled with high debt. Capital was reallocated to existing holdings and new purchase France-based
Rubis, which distributes petroleum and LPG products in the Caribbean and North Africa. As a carbon-based company, Rubis
stock was discounted; however, the company has room for growth after actively expanding into the renewable energy space in
France and building out green partnerships.
Outlook
The torrid pace of inflation has slowed from late 2022 as supply bottlenecks and energy prices declined. Nevertheless, central
banks will continue their tightening monetary policies, albeit at smaller increments, for the foreseeable future, alluding to tight
labor markets, low unemployment and nominal wage growth. A slowdown is inevitable, the speed and gravity of which is still in
question considering the remarkably resilient markets. Recent travels have identified a number of attractively-priced small cap
stocks effectively weathering volatile conditions, ripe for growth in a market recovery.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2022 | $0.6311 | $0.0000 | $0.0000 |
| 2021 | $0.2081 | $0.0000 | $0.1995 |
| 2020 | $0.5790 | $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.
Axiom International Investors began subadvising the Pear Tree Axiom Emerging Markets World Equity Fund December 8, 2018.
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 (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, 2023.
2. 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.
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 Axiom Emerging Markets World Equity
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.