December 2021 Market Insights


By: Tony Minopoli, President & CIO of Knights of Columbus Asset Advisors

Well, I missed that one! In last month’s column, I commented about the lack of a new dominant variant and expressed my hope that we had potentially turned a corner. And then came the Omicron variant. It is already in the United States affecting patients in several states. So where do we go from here? In my opinion, the most significant problem with information flow around the virus is that Covid has become highly politicized. Candidates Biden and Harris didn’t appear to trust any vaccine associated with President Trump and now they can’t stop encouraging, and perhaps coercing Americans to obtain, their vaccinations. I have always believed if you treat people like adults they will usually act like adults. I think we all just want the plain facts.

In a Bloomberg article, “Delta Sends Hospital Admissions up in 39 States as Omicron Lands”, writer Jonathan Levin cites hospital admissions have climbed 18% in the past two weeks to 6,691, the highest since October 13th. According to the U.S. Department of Health and Human Services, the numbers are ticking higher in 39 states. On the positive side, although we are still waiting to understand Omicron’s characteristics, the latest cold weather wave in the U.S. is not as bad as last year’s, at least not in aggregate terms. Hospitalizations, and obviously deaths, are the real concern in both Delta and Omicron. I would like to understand if there is greater protection for those of us that have recovered from Covid and if the existing vaccines provide significant protection from this new variant. It seems we are at least a few weeks away from having better information.

To say the markets have been volatile is an understatement. From its’ high on November 18th, the S&P 500 Index has fallen 2.7%, factoring in a 1.42% advancement today, December 1st, as I write this after the market close. In my view, until we have more clarity on the path of the virus and the characteristics of the new variant, we expect that this volatility will remain.

We now know that the Federal Reserve (“Fed”) and Chairman Jerome Powell are more concerned about inflation. First, Chairman Powell indicated in his testimony to the Senate last week that the Fed may hasten the taper and also are ceasing to use “transitory” to describe inflation. We have never believed that the current bout of inflation was “transitory” for several reasons. The level of wage growth remains high, with Average Hourly Earnings increasing 5.8% for the year ended October 31, 2021. This level of wage growth is, in our view, not consistent with short lived inflation. Higher energy prices are also adding fuel to the inflation fire and we have seen crude rise from $47.62 at the beginning of the year to $66.50 today1 , which represents an increase of nearly 40%. Virtually all commodity prices have risen this year. Finally, the kinks in the supply chain remain and this is causing prices to rise due to the scarcity of items. This all adds up to more persistent inflation.

While inflation may be with us for a while longer than we had hoped, we also believe market technical factors will likely keep a lid on interest rates. The demand for bonds remains high and any uptick in rates will likely be met by further demand. We think that this continued demand for bonds will provide the Fed the necessary cover to start removing stimulus.

Where do we go from here? This market environment is, in our view, extremely tricky because we are not only dealing with normal market issues of supply and demand, company fundamentals, equity valuations and the list goes on and on, but also with the virus, which is complicating the situation. Until we know more about the new strain, it will be difficult to predict any next moves.

We have always espoused our views on strategic and long-term investing. That will not change any time soon. As I have written in this column on numerous occasions, it all starts with your asset allocation. Year end is always a great time to assess your personal asset allocation or the allocation of an institutional pool of assets where you may also have some responsibility.

Take time to consider the situation at hand. Do you have any near-term liquidity needs? Do you expect any significant inflows into your portfolio? Have any other circumstances changed with respect to your portfolio?

Once you have assessed changes, the next step is to have any significant change expressed in your asset allocation structure. If you require liquidity in the near term, move some money to cash. If your investment horizon has shortened, reducing your allocation to stocks might be a worthwhile consideration. If nothing has changed, as painful as it might feel in a volatile market, doing nothing is sometimes the best answer.

I had lunch today with three of our future shining stars, fixed income analysts Marissa Grasso, Josh Paton and Brad Williams. We were discussing market volatility and market timing. I explained my view on market timing in the following terms. When someone is concerned about the market, it is easy to say, “get me out” and move to sideline. Market timing requires a “two step” decision. The first move in timing is the easy one because you felt uneasy and did something to reduce your risk. The next move is the really hard one because you have to decide when to rebuild your equity position.

I always advise clients that are thinking about such a move to identify the market level or event that must take place in order for them to rebuild their positions. Not so easy! All this said, please know that all of us here at KoCAA are ready to help you discuss and work though these very tricky issues.

I hope you all had a wonderful Thanksgiving and I wish you a safe and blessed Merry Christmas and Happy New Year!

Until next month.



[1] As of December 2, 2021

Core Bond Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Core Bond Fund-I Shares 0.19% -0.32% -0.01% 4.05% 3.32%
Bloomberg Barclays US Aggregate Bond Index 0.30% -1.29% -1.15% 3.65% 2.97%
Lipper Core Bond Fund Average 0.11% -1.07% -0.70% 3.76% 3.00%
Lipper Percentile Rank 19% 31%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 500 (1 Year) and 416 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Limited Duration Fund-I Shares -0.20% -0.24% -0.07% 1.98% 1.64%
Bloomberg Barclays Government/Credit 1-3 Year Index -0.08% -0.32% -0.23% 1.90% 1.63%
Lipper Short Investment Grade Debt Fund Average -0.22% 0.06% 0.47% 2.17% 1.93%
Lipper Percentile Rank 67% 65%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Short Investment Grade Debt Funds. Number of Funds in Category: 374 (1 Year) and 293 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Large Cap Growth Fund-I Shares -0.41% 17.12% 22.88% 20.07% 14.55%
Russell 1000 Growth Index 0.61% 24.95% 30.70% 25.10% 19.10%
Lipper Multi-Cap Growth Fund Average -2.88% 17.05% 20.69% 21.85% 15.49%
Lipper Percentile Rank 40% 57%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 508 (1 Year) and 411 (5 Year). Gross Expense Ratio 1.00%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Large Cap Value Fund-I Shares -3.63% 21.43% 25.29% 11.06% 9.20%
Russell 1000 Value Index -3.52% 17.73% 22.25% 10.36% 9.00%
Lipper Multi-Cap Value Fund Average -3.30% 18.83% 23.82% 10.39% 8.40%
Lipper Percentile Rank 35% 34%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 642 (1 Year) and 519 (5 Year). Gross Expense Ratio 1.03%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Small Cap Equity Fund-I Shares -3.15% 19.73% 30.19% 11.55% 9.07%
Russell 2000 Index -4.17% 12.31% 22.03% 12.14% 10.39%
Lipper Small Cap Fund Average -3.02% 19.40% 28.68% 10.21% 8.97%
Lipper Percentile Rank 40% 29%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 859 (1 Year) and 710 (5 Year). Gross Expense Ratio 1.14%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
5 Years
(As of 11/30/21)
Since Inception
(As of 11/30/21)
International Equity-I Shares -4.12% 7.04% 13.59% 11.04% 7.21%
FTSE All World Ex US Index -4.45% 4.20% 9.93% 9.88% 6.04%
Lipper International Multi-Cap Fund Average -4.55% 5.35% 10.94% 8.50% 5.45%
Lipper Percentile Rank 14% 2%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 353 (1 Year) and 275 (5 Year). Gross Expense Ratio 1.33%, Net Expense Ratio 1.01%.

Real Estate Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
QTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Real Estate-I Shares 0.58% 23.10% 0.70% 29.26% 12.10%
FTSE Nareit Equity REITs Index -0.67% 31.61% 1.11% 35.94% 8.83%
Lipper Real Estate Average -1.50% 27.28% -0.27% 31.43% 7.53%
Lipper Percentile Rank 80%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Real Estate Number of Funds in Category: 246 (1 Year) Gross Expense Ratio 1.34%, Net Expense Ratio 1.00%.

Long-Short Equity Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
QTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
Since Inception
(As of 11/30/21)
Long-Short Equity – I Shares 3.52% 12.25% 2.04% 13.91% 0.02%
HFRX Equity Market Neutral Developed Index -0.32% -0.21% -1.40% 0.07% -2.42%
Lipper Long-Short Average -0.95% 9.98% -0.89% 12.88% 7.79%
Lipper Percentile rank 47%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Alternative Long/Short Equity Number of Funds in Category: 234 (1 Year) Gross Expense Ratio 2.17%, Net Expense Ratio 1.73%.

U.S. All Cap Index Fund

One Month
(As of 11/30/21)
YTD
(As of 11/30/21)
QTD
(As of 11/30/21)
1 Year
(As of 11/30/21)
Since Inception
(As of 11/30/21)
U.S. All Cap Index – I Shares -1.42% 22.60% 0.66% 28.49% 23.12%
Knights of Columbus U.S. All Cap Index -1.56% 22.77% 0.59% 28.82% 23.61%
Lipper Multi-Cap Core Average -1.88% 18.73% -0.89% 23.75% 16.26%
Lipper Percentile rank 19%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Core Number of Funds in Category: 650 (1 Year) Gross Expense Ratio 1.46%, Net Expense Ratio 0.25%.

The performance data quoted represents past performance. Past performance is not a guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth less than their original cost and current performance may be higher or lower than the performance quoted. Investment performance does not reflect the redemption fee; if it was reflected, the total return would be lower than shown. For performance data current to the most recent month end, please call 1-844-KC-FUNDS.

Fund performance for the 1 year, 5-year, and Since Inception periods are annualized. The inception date for Limited Duration, Core Bond, Large Cap Growth, Large Cap Value, Small Cap, and International are February 27, 2015. 1 year and 5-year fund performance is not available for the Real Estate Fund, Long/Short Equity, or the U.S. All Cap Index since the inception dates of the funds are September 30, 2019, December 21, 2019, and December 31, 2019, respectively. Lipper percentile rank is omitted for the Real Estate Fund, Long/Short Equity, and U.S. All Cap Fund given performance is not yet available.

Effective July 21, 2020, the Knights of Columbus Real Estate Fund underwent a change in its Investment Objective and a name change to reflect the new investment strategy as detailed in The Funds’ Prospectus update of July 20, 2020. The Fund was formerly known as Knights of Columbus Global Real Estate Fund. Results prior to July 20, 2020, reflect the performance of the Fund's previous strategy.

Knights of Columbus Asset Advisors LLC has contractually agreed to waive fees and/or to reimburse expenses to the extent necessary to keep Total Annual Fund Operating Expenses, (excluding interest, taxes, fund brokerage commissions, acquired fund fees and expenses and non-routine expenses) from exceeding the Net Expense Ratio for the respective Funds’ Institutional Shares average daily net assets until February 28, 2022.

Benchmark Definitions



Bloomberg Barclays Government/Credit 1-3 Year Index – benchmark for Limited Duration Fund
The U.S. Government/Credit Index is the non-securitized component of the U.S. Aggregate Index and was the first macro index launched by Barclays Capital. The U.S. Government/Credit Index includes Treasuries (i.e., public obligations of the U.S. Treasury that have remaining maturities of more than one year), government-related issues (i.e., agency, sovereign, supranational, and local authority debt), and corporates. The U.S. Government/Credit Index was launched on January 1, 1979 and is a subset of the U.S. Aggregate Index. The 1-3 year index includes all medium and larger issues of U.S. government, investment-grade corporate, and investment-grade international dollar-denominated bonds that have maturities of between 1 and 3 years and are publicly issued.

Bloomberg Barclays US Aggregate Bond Index – benchmark for Core Bond Fund
The Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency). Provided the necessary inclusion rules are met, US Aggregate eligible securities also contribute to the multi-currency Global Aggregate Index and the US Universal Index, which includes high yield and emerging markets debt. The US Aggregate Index was created in 1986.

FTSE All-World Ex-U.S. Index – benchmark for International Equity Fund
The FTSE All-World ex US Index is one of a number of indexes designed to help investors benchmark their international investments. The index comprises Large and Mid cap stocks providing coverage of Developed and Emerging Markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.

Russell 1000 Growth Index – benchmark for Large Cap Growth Fund
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the large-cap growth segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect growth characteristics.

Russell 1000 Value Index – benchmark for Large Cap Value Fund
The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics.

Russell 2000 Index – benchmark for Small Cap Fund
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set.

FTSE Nareit Equity REITs Index – benchmark for Real Estate Fund – The FTSE Nareit Equity REITs Index contains all Equity REITs not designated as Timber REITs or Infrastructure REITs. Prior to December 2010, the index included Timber REITs and Infrastructure REITs.

HFRX Equity Market Neutral Index – benchmark for Long/Short Equity Fund HFRX Equity Market Neutral Index The HFRX Equity Market Neutral Index employs sophisticated quantitative techniques of analyzing price data to ascertain information about future price movement and relationships between securities, select securities for purchase and sale. These can include both Factor-based and Statistical Arbitrage/Trading Strategies.

Knights of Columbus U.S. All Cap Index – benchmark for U.S. All Cap Index Fund Knights of Columbus U.S. All Cap Index Adheres to the United States Conference of Catholic Bishops’ Socially Responsible Investment Guidelines. Consists of all common stocks and real estate investment trusts in the Solactive US Broad Market Index excluding companies that are determined by Institutional Shareholder.

Indices are unmanaged and do not reflect the effect of fees. One cannot invest directly in an index.

Lipper Peer Group Definitions



Lipper Short Investment Grade Debt Classification – peer group for Limited Duration Fund
Funds that invest primarily in investment-grade debt issues (rated in the top four grades) with dollar-weighted average maturities of less than three years. The Limited Duration Bond fund ranked 251 out of 374 funds measured for the one year ranking period and ranked 206 out of 293 funds measured for the five year ranking period as of June 30, 2021.

Lipper Core Bond Classification – peer group for Core Bond Fund
Funds that invest at least 85% in domestic investment-grade debt issues (rated in the top four grades) with any remaining investment in non-benchmark sectors such as high-yield, global and emerging market debt. These funds maintain dollar-weighted average maturities of five to ten years. The Core Bond fund ranked 112 out of 500 funds measured for the one year ranking period and ranked 143 out of 416 funds measured for the five year ranking period as of June 30, 2021.

Lipper Multi-Cap Growth Classification – peer group for Large Cap Growth Fund
Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap growth funds typically have above-average characteristics compared to the S&P SuperComposite 1500 Index. The Large Cap Growth fund ranked 434 out of 508 funds measured for the one year ranking period ranked and 280 out of 411 funds measured for the five year ranking period as of June 30, 2021.

Lipper Multi-Cap Value Classification – peer group for Large Cap Value Fund
Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap value funds typically have below-average characteristics compared to the S&P SuperComposite 1500 Index. The Large Cap Value fund ranked 375 out of 642 funds measured for the one year ranking period and ranked 151 out of 519 funds measured for the five year ranking period as of June 30, 2021.

Lipper Small-Cap Core Classification – peer group for Small Cap Fund
Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) below Lipper’s USDE small-cap ceiling. Small cap core funds have more latitude in the companies in which they invest. These funds typically have average characteristics compared to the S&P SmallCap 600 Index. The Small Cap Equity fund ranked 496 out of 859 funds measured for the one year ranking period and ranked 337 out of 710 funds measured for the five year ranking period as of June 30, 2021.

Lipper International Multi-Cap Core Classification – peer group for International Equity Fund
Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. International multi-cap funds typically have characteristics compared to the MSCI EAFE Index. The International Equity fund ranked 9 out of 353 funds measured for the one year ranking period and ranked 4 out of 275 funds measured for the five year ranking period as of June 30, 2021.

Lipper Real Estate Classification – peer group for Real Estate Fund
Funds invest primarily in equity securities of domestic and foreign companies engaged in the real estate industry. The Real Estate fund ranked 161 out of 246 funds measured for the one year ranking period as of June 30, 2021.

Lipper Alternative Long/Short Equity Classification – peer group for Long/Short Equity Fund
Funds that employ portfolio strategies combining long holdings of equities with short sales of equities, equity options or equity index options. The funds may be either net long or net short, depending on the portfolio manager’s view of the market. The Long/Short fund ranked 196 out of 234 funds measured for the one year ranking period as of June 30, 2021.

Lipper Multi-Cap Core Classification – peer group for U.S. All Cap Index Fund
Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. The U.S. All Cap Index fund ranked 117 out of 650 funds measured for the one year ranking period as of June 30, 2021.