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Pax Global Opportunities Fund Company Examples

The Pax Global Opportunities Fund (PXGOX) invests in companies that are positioned to benefit from the transition to a more sustainable global economy. The following are examples of companies in the Fund.

HDFC Bank

HDFC Bank began operations in 1995 with the mission to become a world-class Indian bank. It is well on its path to achieving this goal as the highest quality private sector bank in India — poised to capture the opportunity of still relatively low penetration and adoption of credit and bank accounts in India, with structural growth from the young and increasing population with rising incomes. HDFC has a best-in-class deposit franchise resulting in a lower cost of funds than peers. This allows the bank to focus on retail lending, where it can earn attractive margins despite lower lending rates as compared to the commercial (yet riskier) lending sector. As a result, HDFC has a clean balance sheet and a low level of non-performing loans. The bank continues to take market share from competitors and is investing heavily in technology with a careful eye on costs. On the wholesale banking side, HDFC has a strong cash management product with a 22 percent market share. A strong management team with consistent execution, rising fee income, good asset quality, and a strong capital base make this a compelling and high-quality investment in the emerging markets financial sector.

Cadence Design Systems

Cadence is the leading provider of electronic design automation (EDA) tools that are used to design semiconductor chips and electronic systems. In the age of “connected everything,” this company provides some of the key architectural building blocks for the era of the Internet of Things. Cadence’s semiconductor design tools let enterprises introduce connected systems and machinery, which contribute to improved energy efficiency through reducing required inputs and increased productivity. Autonomous vehicles, home automation, 5G connectivity, factory and building energy management, data security, logistics and navigation, and smart cities all rely on increasingly complex systems, at the heart of which lie integrated circuits on semiconductor chips. Chip design tool companies operate stable business models with high barriers to entry due to high research and development costs, which are enabled by substantial free cash flow. Synopsys and Mentor Graphics are the other two large players in chip design. With a unique business model that is agnostic in terms of individual software or hardware, Cadence designs whole electronics systems or individual chips, as well as increasingly small and complex integrated circuits, including those interacting with sensors. Mission critical technology for electronic systems across the entire electronics design chain with a loyal global customer base make Cadence an attractive U.S. information technology company.

Danone

Danone is a French global food products company best known for its yogurt, infant formula and water products. The company has employees in more than 60 countries, and its products are available in more than 120 countries. A large and important percentage (>50 percent) of Danone’s end markets and therefore revenues and growth opportunities are in the emerging markets. Danone sees itself as a key player in the food revolution, with a mission to “bring health through food to as many people as possible.” For a number of years, this high-quality consumer staple company has been on a path focused on faster growing markets in fresh dairy, nutrition and water, particularly in emerging markets. The 2016 acquisition of the U.S.-based WhiteWave (brands such as Earthbound Organic, Horizon Organic, Silk, SO Delicious and Alpro) among other decisions, and a new leadership team, create the opportunity for the valuation gap to peers to narrow — rebuilding margins by cost cutting and improving cash flow generation, increasing profitability and thus driving earnings growth. Danone is also a recognized sustainability leader, making CDP’s Water A-List as a pioneering company with regard to its water practices — with CDP selecting companies that help “build our new sustainable economy that works for both people and planet.”

Becton Dickinson

BD is a large global medical technology company based in the U.S. with a strategic focus in four core areas: reducing the spread of infections, advancing global health, enhancing therapy, and improving disease management. As the leading provider of products conducive to safer drug delivery and infection control in medical care settings, BD is an active contributor to reducing the spread of antimicrobial resistance and lowering the rate of hospital-acquired infections. Having built a strong platform over the last five years, BD develops and manufactures medical devices, diagnostic systems, reagents and bioscience systems. BD typically retains dominant market share in key product categories, a broad and deep portfolio with scale and quality, and leverages these resources for continued research and innovation. Operating in more than 50 countries, including emerging markets, the company has a 20-year history of generating consistent growth. Financial characteristics of high return on equity, robust multi-year operating margin expansion and strong free cash flow make BD an attractive defensive holding in the portfolio. Impax expects high leverage levels associated with recent acquisitions to be reduced over time.

Pax Global Opportunities Fund Top 10 Holdings
(As of 06/30/2019)

Holdings are subject to change.
This information is not a recommendation to buy or sell any security.
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