As of September 30, 2013
U.S. stock markets continued to provide positive returns for investors during the third quarter of 2013 despite cross currents flowing from policy issues in Washington D.C. and sometimes inconsistent signals regarding economic growth. The U.S. Federal Reserve (Fed) continued to publicly comment on the anticipated (and inevitable) reduction of its $85-billion-a-month bond buying program, a quantitative easing1 (QE) strategy that has helped keep interest rates low and bond prices high while whetting investor interest in risk assets, particularly U.S. equities. When the Fed did not reduce the program at the September Federal Open Market Committee meeting, investor uncertainty was piqued. Other cross currents included second quarter earnings reports from companies listed on the Standard & Poor’s 500 Index (S&P 500)2 that were largely favorable while their revenue growth reports were less impressive. Unemployment trended lower while concerns simmered about the quality of the jobs the economy is creating.
Pax World Balanced Fund earned 5.72% for the quarter ended September 30, 2013. The Fund’s return outpaced the blended benchmark index return of 3.39% for the same period. The blended benchmark comprises a 60% allocation to the S&P 500 Index and a 40% allocation to the Barclays U.S. Aggregate Bond Index (Barclays Aggregate).3 During the period, portfolio allocations were approximately 68% of assets in stocks, just over 31% in bonds and just under 1% cash.
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1Quantitative easing is monetary policy used by central banks to stimulate a national economy. Typically, central banks implement quantitative easing by buying financial assets from commercial banks and other private institutions, injecting a pre-determined quantity of money into the economy.
2The S&P 500 is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. One cannot invest directly in an index.
3The Barclays U.S. Aggregate Bond Index represents securities that are U.S. domestic, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities and asset-backed securities. Investors cannot invest directly in any index.