Pear Tree Polaris Small Cap Fund
The PEAR TREE POLARIS SMALL CAP FUND provides investors with the opportunity to participate in the growth potential of domestic small cap companies. A small cap company will generally be a company with a market capitalization from $250 million to $5 billion.
Investment Process
The Fund generally invests in domestic stocks with a market cap of up to $5 billion at the time of purchase. 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 industry.
Buy and Sell Discipline
The Fund uses proprietary models to rank publicly traded small cap companies on the basis of value and to narrow the universe down to 200 to 400 for further consideration. The Fund supplements the screening process by performing in-depth financial and fundamental analysis. Risk controls are also employed to prevent the Fund from concentrating its investments in any particular industry sector.
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 40 years of investment experience to the Fund.
Fund Overview
YTD RETURN*
-4.07%
NAV*
$25.93
INCEPTION
August 3, 1992
MINIMUM INVESTMENT
$2,500
CUSIP
70472Q401
BENCHMARK
Russell 2000
NET EXPENSE RATIO(1)
1.45%
GROSS EXPENSE RATIO(2)
1.45%
*as of 5/5/2025
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.
Bin Xiao, CFA
Jason Crawshaw
Performance
| YTD As Of 5/5/2025 |
Quarterly As Of 3/31/2025 |
1 Year As Of 3/31/2025 |
3 Years As Of 3/31/2025 |
5 Years As Of 3/31/2025 |
10 Years As Of 3/31/2025 |
Since Inception As Of 3/31/2025 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| -4.07% | -2.81% | -1.33% | 4.91% | 16.26% | 6.06% | 8.86% | 1.45% | 1.45% |
Calendar Year
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|---|---|
| 8.69% | 12.84% | -5.10% | 24.23% | -4.78% | 23.50% | -10.88% | 6.42% | 20.88% | -1.48% | -6.81% |
Portfolio
as of March 31, 2025
Top Ten Holdings
| Percentage Of Total Net Assets | 25.60 |
|---|---|
| Ingles Markets Inc. | 4.20% |
| Covenant Logistics Group, Inc. | 2.70% |
| HomeTrust Bancshares, Inc. | 2.40% |
| Northeast Bancorp | 2.40% |
| The Bank of N.T. Butterfield & Son Limited | 2.40% |
| Barrett Business Services, Inc. | 2.30% |
| International Bancshares Corporation | 2.30% |
| Netstreit Corporation | 2.30% |
| EVERTEC Inc. | 2.30% |
| Essential Properties Realty Trust, Inc. | 2.30% |
Sector Weightings
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| Industrials | 28.10% |
| Financials | 26.80% |
| Consumer Discretionary | 8.70% |
| Materials | 6.80% |
| Information Technology | 6.70% |
| Consumer Staples | 6.40% |
| Health Care | 5.70% |
| Real Estate | 5.30% |
| Energy | 4.00% |
| CASH + other assets (net) | 1.50% |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| United States | 88.60% |
| Puerto Rico | 4.40% |
| Bermuda | 2.40% |
| Colombia | 1.80% |
| Canada | 1.30% |
| CASH + other assets (net) | 1.50% |
Portfolio Characteristics
| Net Assets | $88,156,034 |
|---|---|
| Number Of Holdings | 56 |
| Percentage in Top 10 Holdings | 25.6 |
| Weighted Average Market Cap (Mil) | $4,383.90 |
| Annual Turnover | 12.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.00% |
|---|---|
| Equity Securities | 98.5 |
| Cash and Other Assets (Net) | 1.5 |
Commentary
For the Quarter ended March 31, 2025
The Pear Tree Polaris Small Cap Fund’s Ordinary Shares (the “Fund”) outperformed its benchmark, the Russell 2000 Total Return Index (the “Index”). The Fund had a return of (2.81%) at net asset value compared to (9.48%) for the Index.
Market Conditions and Investment Strategies
The Fund outperformed in the vast majority of sectors, led by absolute positive gains in Real Estate, Consumer Staples, Energy and Financials. Certain cyclicals (Consumer Discretionary and Information Technology (IT)) detracted, weighed down by tariff and inflation concerns.
In Real Estate, Netstreit and Global Medical REIT both posted gains in excess of 10%, as that industry subsector fared well in the face of first quarter volatility. Netstreit lowered rental exposure to troubled tenants and increased exposure to investment grade tenants. Global Medical announced a joint venture with Heitman, which is expected to drive growth in coming quarters.
The Fund substantially outperformed in Industrials, but it was a hollow win in a down sector. DNOW reported strong quarterly results, pointing to a healthy balance sheet, expense management and inventory controls. Similarly, CSG Systems posted solid earnings, guiding for a strong 2025 on the back of recent business wins. Conversely, Wabash faced cyclical issues endemic of the U.S. trucking industry – tariff concerns, lower consumer confidence – which may impact transport volumes. Competition in the space also heated up.
In a higher-for-longer interest rate environment, financial institutions like HomeTrust Bancshares are able to restructure balance sheets and reprice loans at a higher rate. SLM Corp. was up, uniquely positioned to capitalize on possible changes to the Federal student loan programs as more students tap private loans. Bermuda-based N.T. Butterfield referenced net interest margins expansion and a good deposit environment. Shareholders lauded the firm’s capital allocation priorities (dividends, loan growth, M&A).
In Consumer Discretionary, Winnebago weakened as dealers remain unwilling to purchase new motorhome and marine inventory, uncertain of end market demand. Winnebago has been adapting, managing costs and developing new products at lower price points to attract a larger demographic. Clothing retailers American Eagle and The Buckle Inc. painted cautious outlooks for 2025 on cooling demand and tariff-related procurement concerns.
In IT, MKS Instruments traded down as it offered more conservative guidance than the market forecast. The company’s specialty and industrial segments are still in the trough of the cycle. Arrow Electronics Inc. cited softer demand for semiconductor chips, as customers work through stockpiled inventory.
Portfolio Changes
During the quarter, the Fund exited Curtiss-Wright Corp. and Trubridge Inc. when each reached target valuation limits. We took profits from H&E Equipment Services, subject to an acquisition at a 100% premium. We replaced Knight-Swift Transportation with Covenant Logistics Group; Covenant is more of a niche trucking player less exposed to the rate environment. Three other new purchases included Laureate Education, Progress Software Corp. and ePlus Inc.
Outlook
Last quarter saw a significant rally in the small cap space, as the new U.S. Administration heralded a pro-business, pro-local job environment. All that optimism came to an abrupt halt in early 2025, as policy focused on tariffs as a negotiation tactic. Concerns arose around inflation, consumer spending and business confidence, with investors rotating out of cyclical names. Current market volatility has allowed us to enter areas of the market where we have had little exposure in the past due to pricing and we are able
to buy even higher quality names at a discount, adding some very interesting business leaders within subindustries.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2024 | $0.1028 | $0.0000 | $0.7808 |
| 2023 | $0.2212 | $0.0000 | $0.0000 |
| 2022 | $0.1044 | $0.0000 | $2.2043 |
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 for all funds except, Polaris International Opportunities Institutional and R6, Polaris Small Cap Institutional and R6 and Quality R6. For these fund classes the fee waiver and/or expense reimbursements that will reduce any fund operating expenses will be in effect until October 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.