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*
6.01%
NAV*
$11.82
INCEPTION
February 6, 2017
MINIMUM INVESTMENT
$100,000
CUSIP
70472Q765
BENCHMARK
MSCI ACWI ex. US SMALL CAP
NET EXPENSE RATIO(1)
1.02%
GROSS EXPENSE RATIO(2)
1.12%
*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) |
|---|---|---|---|---|---|---|---|---|
| 6.01% | 0.18% | 11.72% | 0.54% | 6.87% | N/A | 6.43% | 1.12% | 1.02% |
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 March 31, 2024
Top Ten Holdings
| Percentage Of Total Net Assets | 27.00% |
|---|---|
| Vistry Group plc | 3.00% |
| De'Longhi S.p.A. | 2.90% |
| D'Ieteren S.A. | 2.90% |
| Rubis | 2.80% |
| Aalberts N.V. | 2.80% |
| Hexpol AB | 2.70% |
| Elis S.A. | 2.60% |
| Glanbia plc | 2.50% |
| Daicel Corporation | 2.50% |
| Signify N.V., | 2.30% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Industrials | 24.40% |
| Financials | 21.50% |
| Consumer Discretionary | 19.90% |
| Materials | 8.10% |
| Information Technology | 6.70% |
| Utilities | 6.10% |
| Consumer Staples | 4.40% |
| Energy | 2.30% |
| Health Care | 2.00% |
| Communication Services | 1.00% |
| Real Estate | 0.80% |
| CASH + other assets (net) | 2.80% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 70.40% |
|---|---|
| United Kingdom | 17.20% |
| Japan | 11.30% |
| France | 10.00% |
| South Korea | 6.00% |
| Netherlands | 5.10% |
| Sweden | 5.10% |
| Thailand | 4.40% |
| Canada | 4.20% |
| Norway | 4.10% |
| Ireland | 3.00% |
Portfolio Characteristics
| Net Assets | $1,023,143,794 |
|---|---|
| Number Of Holdings | 66 |
| Percentage in Top 10 Holdings | 27.00% |
| Weighted Average Market Cap (Mil) | $3,565.26 |
| Annual Turnover | 18.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 97.20% |
| Cash and Other Assets (Net) | 2.80% |
Commentary
For the Quarter ended June 30, 2024
The Pear Tree Polaris Foreign Value Small Cap Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the MSCI ACWI ex USA Small Cap Index (the “Index”). The Fund had a return of 0.00% at net asset value compared to 0.85% for the Index.
Market Conditions and Investment Strategies
The Fund outperformed in the majority of sectors, led by Financials, Consumer Discretionary, Information Technology (IT) and Consumer Staples; however, the underperformance in overweight Industrials and Utilities led to lackluster returns. From a country perspective, the Fund outperformed in the United Kingdom, Canada, Taiwan and Hong Kong, to name a few. The Netherlands, Japan and France detracted, the latter of which was impacted by geopolitical turmoil as three parties vied for power in recent elections.
Future PLC released a better-than-expected trading update that showed audience improvement in key technology and gaming sectors. These metrics seemingly proved that the new CEO’s “content quality” plan has met with early success. Among Financials, goeasy Ltd. was up more than 20% after announcing strong quarterly results that beat estimates, pointing to loan growth. U.K. mortgage lender, OSB Group, posted a robust trading update, highlighting loan originations and retail deposits. Other double-digit sector performers included flatexDEGIRO, Sparebank 1 SMN and Sparebank 1 Oestlandet. IT was boosted by Primax Electronics
and Kingboard Laminates. A first quarter 2024 buy, Kingboard Laminates charged ahead as destocking dwindled and consumer electronics customers began placing orders. The same thesis boosted Primax.
Industrials had barbell returns, as outsized gains from QinetiQ Group and Bizlink Holding Inc. were matched by losses at Aalberts NV, Signify NV and Sixt SE. Bizlink gained traction as its cable connection components have been qualified by NVIDIA, while it has also embarked on liquid cooling supply components tied to artificial intelligence. The U.K. defense tech company, QinetiQ, reported strong earnings, with high single-digit organic growth, stable operating margins and upbeat guidance. The company’s services are in high demand on the backdrop of ongoing international conflicts.
Signify’s first quarter results underwhelmed, as the company noted softer demand in European professional business and China. However, the company maintained its EBITDA metrics and 2024 guidance. Aalberts was a strong performer last quarter; the stock started to decline after issuing a late May trading update that outlined weakness in its building and industrial divisions. French energy operator, Rubis, was the largest detractor, as quarterly sales dropped and gross margins eroded on lackluster operations in Africa. The company was also impacted by the negative sentiment pervading French markets after recent national elections.
Portfolio Changes
There were no new buys or sells during the quarter.
Outlook
We have witnessed a long period of large caps outperforming all other asset classes, on the back of heady technology gains and AI excitement. We believe the dramatic outperformance versus small caps may be quelled on interest rate cuts (small caps tend to be more economically sensitive than large caps) and an improved earnings outlook. We have stated all along that we look for companies with strong underlying business fundamentals; those companies should perform well on growth shoots in Europe, Asia (with the exception of China) and the U.S.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2023 | $0.3943 | $0.0000 | $0.0000 |
| 2022 | $0.6361 | $0.0000 | $0.0000 |
| 2021 | $0.2138 | $0.0000 | $0.1995 |
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.