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 35 years of investment experience to the Fund.
Fund Overview
YTD RETURN*
1.09%
NAV*
$23.18
INCEPTION
August 3, 1992
MINIMUM INVESTMENT
$2,500
CUSIP
70472Q401
BENCHMARK
Russell 2000
NET EXPENSE RATIO(1)
1.53%
GROSS EXPENSE RATIO(2)
1.53%
*as of 9/22/2023
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 9/22/2023 |
Quarterly As Of 6/30/2023 |
1 Year As Of 6/30/2023 |
3 Years As Of 6/30/2023 |
5 Years As Of 6/30/2023 |
10 Years As Of 6/30/2023 |
Since Inception As Of 6/30/2023 |
Total Gross Expense Ratio(1) | Total Net Expense Ratio(2) |
|---|---|---|---|---|---|---|---|---|
| 1.09% | 2.06% | 10.11% | 14.57% | 3.65% | 6.13% | 8.83% | 1.53% | 1.53% |
Calendar Year
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|---|---|---|
| -5.10% | 24.23% | -4.78% | 23.50% | -10.88% | 6.42% | 20.88% | -1.48% | -6.81% | 40.21% | 13.39% |
Portfolio
as of June 30, 2023
Top Ten Holdings
| Percentage Of Total Net Assets | 27.70 |
|---|---|
| Eagle Materials Inc. | 3.30% |
| South Plains Financial, Inc. | 3.00% |
| Barrett Business Services, Inc. | 2.90% |
| Allison Transmission Holdings, Inc. | 2.90% |
| Graphic Packaging Holding Co. | 2.80% |
| MKS Instruments, Inc. | 2.70% |
| Ingredion Incorporated | 2.70% |
| OFG Bancorp | 2.50% |
| Wabash National Corporation | 2.50% |
| Curtiss-Wright Corporation | 2.40% |
Sector Weightings
| Percentage Of Total Net Assets | 100.0% |
|---|---|
| Industrials | 32.5 |
| Financials | 21.7 |
| Materials | 12.6 |
| Health Care | 8.5 |
| Energy | 7.4 |
| Information Technology | 7 |
| Consumer Discretionary | 5.7 |
| Consumer Staples | 2.7 |
| CASH + other assets (net) | 1.9 |
Top Ten Country Allocations
| Percentage Of Total Net Assets | 100.00% |
|---|---|
| United States | 90.20% |
| Puerto Rico | 4.90% |
| Canada | 3.00% |
| CASH + other assets (net) | 1.90% |
Portfolio Characteristics
| Net Assets | $78,282,146 |
|---|---|
| Number Of Holdings | 52 |
| Percentage in Top 10 Holdings | 27.7 |
| Weighted Average Market Cap (Mil) | $4,133.19 |
| Annual Turnover | 30.00% |
Portfolio Allocation
| Percentage of Portfolio | 100.0% |
|---|---|
| Equity Securities | 98.1 |
| Cash and Other Assets (Net) | 1.9 |
Commentary
For the Quarter ended June 30, 2023
The Pear Tree Polaris Small Cap Fund’s Ordinary Shares (the “Fund”) underperformed its benchmark, the Russell 2000 Total Return Index (the “Index”). The Fund had a return of 2.06% at net assetvalue compared to 5.21% for the Index.
Market Conditions and Investment Strategies
Benchmark returns were concentrated at the top of the market, focused on high growth and tech-laden companies. The growth
resurgence was premised on lower inflation expectations, which may prove premature per June’s U.S. labor report. However, the
most recent inflation data does lend some evidence that we are in the late stages of the interest rate tightening cycle. In this
market, cyclicals dominated, led by Industrials, Materials, Financials and Information Technology (IT).
In Industrials, Allison Transmissions was up after the ISM New Orders Index rose 7% in June. The ISM is one of the leading
indicators of freight trends, which may bode well for Allison’s order volume in the coming months. Additionally, the truck OEMs
are reporting full order books. V2X reported robust quarterly results, pointing to increased revenues, volumes and program
productivity, while securing sizeable new contracts. Among Materials, copper miner Lundin Mining posted notable gains on
higher commodity prices. Lundin continues to work through its acquisition of Josemaria Resources and the integration of the
Caserones Copper Mine is a near-term priority. Eagle Materials announced quarterly and full fiscal year results with record
revenues, gross margin expansion and successful acquisition integrations. Their cement business is fully sold out with no
capacity to spare.
Among IT companies, MKS Instruments reported better than anticipated quarterly results with decent revenues from electronics,
packaging and specialty industrial divisions. MKS also progressed in the acquisition integration of Atotech Ltd. Chip and
electronic components distributor Arrow Electronics continued to see good demand for its services. While an improving supply
chain is moderating heady growth, new customers and design wins may deliver a structurally better margin than pre-pandemic.
In the Financial sector, SLM Corp. had a strong first quarter, with improving credit metrics, 12% loan growth and floating rate
assets that boosted margin expansion. Portfolio growth and an increase in core yields drove Hercules Capital’s first quarter 2023
results, with investment income and net investment income at record levels. Sector detractors included a small handful of U.S.
regional and community banks that were pressured by expense growth and higher deposit costs.
Holdings in the Energy sector detracted most. NOV Inc. is seeing very healthy demand and has a strong order book. However, the
main steel supplier for NOV’s drill pipe business experienced manufacturing issues; limited shipments and alternative material
sourcing impacted NOV’s profits. First quarter sales fell short of expectations, causing Dril-Quip shares to trade lower.
Portfolio Changes
During the quarter, the Fund exited Cinemark Holdings Inc., BGSF Inc., Central Pacific Financial, and Methode Electronics Inc.
Capital was used to purchase some high-quality Texas banks, attractively priced following the recent banking crisis. San Antoniobased Cullen/Frost has had 29 straight years of dividend increases. Its conservative culture is evidenced by its low loan to
deposit ratio and ample liquidity, positioning itself for further profitable growth as peers pull back on lending. Fellow community
bank, Southside Bancshares, operates 55 branches throughout Texas, managing $7.8 billion in assets. The institution is known
for its conservative underwriting standards and strong credit quality.
Outlook
After the bursting of the meme stock bubble last year, we are seeing a resurgence of speculative activity. However, we remain
committed to investing in solid, cash flowing businesses at attractive prices. Over the long haul, we believe this will allow our
small-cap value portfolio to perform as intended.
Distributions
| Dividend | Short-Term Capital Gain | Long-Term Capital Gain | |
|---|---|---|---|
| 2022 | $0.1044 | $0.0000 | $2.2043 |
| 2021 | $0.1543 | $0.6423 | $1.4143 |
| 2020 | $0.1568 | $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, 2024.
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.