Market Insights


February 2022

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

January was a pretty difficult month to be sure. Inflation concerns and Federal Reserve (“Fed”) reactions to inflation were the dominant themes throughout the month. Many, including myself, are calling for the Fed to increase the Federal Funds Rate1 four times this year to try and stave off inflation. Many on Wall Street are calling for more and I saw one analyst call for seven increases. Regardless, the concern is that the Fed needs to react to inflation. Doug Riley, one of our equity portfolio managers, and I have a bet on the number of rate hikes. Doug staked out less than four rate hikes and I took four or higher. I have a spot all picked out to pin the $1 bill I will collect from Mr. Riley!

Regular readers know that Knights of Columbus Asset Advisors LLC (“KoCAA”) has never been in the “transitory inflation” camp. Our belief is that inflation is more systemic and is driven by high energy prices, increasing wages and continuing snags in the global supply chain. Each of these items is complicated and the synergistic effect of all three items is what, I believe, has led us to the belief that inflation will take a little longer to be brought under control. That said, we do believe that inflation will be a 2022 issue and likely be brought to some level of control by the first quarter of 2023. We are not in the camp that we are ushering in a secular period of high inflation.

With the inflation concern towering over the financial markets, we saw the S&P 500 decrease by 5.26%2 during January, inclusive of the strong rebound of 4.32% during the last two trading days of the month. Nasdaq fared even worse with a return of -8.98% for the month, despite a solid jump of 6.54% on the last two trading days of the month. The 10-year Treasury started this year at a yield of 1.51% and ended the month at 1.78%.

The last release of Consumer Price Inflation (CPI) was 7.0% annual inflation and 5.5% annual inflation, factoring out food and energy increases3. The Fed’s preferred inflation gauge, Core U.S. Personal Consumption Index (Core PCE) was growing by 4.9% on an annual basis, as of December 31, 2021. No matter how you slice it, inflation is with us, and the Federal Reserve has taken on a more hawkish stance to protect the U.S. economy from an elongated bout with inflation. The Fed dropped the view of transitory inflation and is much more focused on the base effects that are driving inflation.

As we continue to look at the capital markets, we have been looking at a rotation from growth to value as energy, financials and consumer staples have taken the lead. Companies that are sporting very high price/earnings4 multiples saw significant pressure in January as concerns over inflation drove stock prices lower. We still believe that stocks prices in 2022 will follow earnings growth and, we believe, earnings will grow in the high single digits.

No market prognostication is ever complete without at least one caveat. Here is mine. Geopolitical tensions are as high now as at any time in recent memory. I certainly do not mean to minimize the horrific situations in Syria or Afghanistan from earlier in this century, but the world is waiting to see what happens with Russia and Ukraine and China and Taiwan. Personally, I do not believe that Putin will take any action with an incursion into Ukraine until after the closing ceremony of Winter Olympics on February 20, 2022. It is not that I believe that Vladimir Putin is an avid enthusiast of winter sports. Rather, there is a certain level of being an ally with China and China wants to sparkle on the world stage by showcasing the Olympics. It is the same reason that I do not believe that China will consider an incursion into Taiwan until the end of the Olympics. I do remain hopeful that diplomacy will work, and military action does not occur. Putin appears to miss the “glory days” of the Soviet Union and seems to view the former Russian satellite countries as “his”. Taiwan has never been recognized by China as a separate country and Xi Jing Ping seems ready to end what he views as Taiwan’s folly of being an independent state.

Many U.S. citizens are tired of foreign wars, but, in my opinion, the U.S. can ill afford the loss of global prestige if we stand by and watch Ukraine fall under President Biden as we watched former President Obama stand by while soldiers annexed Crimea. I do find it increasingly ironic how adamant we are about the sovereign border of Ukraine while our southern border is less sound than a leaky sieve, but that’s a story for another day. I believe that NATO and all of the allies within its alliance need to stand ready to defend Ukraine or what’s Putin’s next stop?

A final thought as we come to the end of January. As I was penning this essay a client called to discuss our meeting next week. We discussed the volatility in the market and the sharp rebound of the last two trading sessions. I reminded her that this market rebound is one of the reasons that we do not recommend market timing and are big adherents to strategic asset allocation. Always assess where you are on your financial journey, assess any changes that may have occurred and alter your plan in response to your changes. At Knights of Columbus Asset Advisors, we always ready to discuss asset allocation and your financial structure.

I am an avowed fan of winter sports having been both a skier and hockey player and I hope the diversion of the Winter Olympic Games from some of the current issues will be enjoyed by the world. I am even more hopeful, and prayerful, that God will lead those in power to make decisions based on building a lasting peace and safer world than decisions grounded in aggression in warfare. May God bless us all.

Until next month.



[1] Federal Funds Rate – The rate at which commercial banks borrow and lend their excess reserves to each other overnight. This target interest rate is set by the Federal Open Market Committee.

[2] The return does not include the effects of dividends reinvested, with dividends reinvested, the S&P 500 decreased by 5.17%

[3] Source: Bloomberg, as of December 31, 2021

[4] Price-to-earnings ratio – The ratio for valuing a company that measures its current share price relative to its earnings per share.

Core Bond Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Core Bond Fund-I Shares -2.12% -2.12% -0.58% 3.96% 3.24%
Bloomberg Barclays US Aggregate Bond Index -2.15% -2.15% -1.54% 3.57% 2.90%
Lipper Core Bond Fund Average -2.05% -2.05% -1.26% 3.65% 2.93%
Lipper Percentile Rank 17% 30%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 511 (1 Year) and 430 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Limited Duration Bond Fund-I Shares -0.70% -0.70% -0.33% 1.93% 1.61%
Bloomberg Government/Credit 1-3 Year Index -0.72% -0.72% -0.47% 1.85% 1.58%
Lipper Short Investment Grade Debt Fund Average -0.74% -0.74% 0.07% 2.13% 1.82%
Lipper Percentile Rank 66% 67%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Short Investment Grade Debt Funds. Number of Funds in Category: 368 (1 Year) and 290 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Large Cap Growth Fund-I Shares -8.67% -8.67% 19.39% 20.24% 14.68%
Russell 1000 Growth Index -8.58% -8.58% 27.60% 25.32% 19.21%
Lipper Multi-Cap Growth Fund Average -11.77% -11.77% 15.25% 21.90% 15.88%
Lipper Percentile Rank 40% 58%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 493 (1 Year) and 410 (5 Year). Gross Expense Ratio 1.00%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Large Cap Value Fund-I Shares -2.91% -2.91% 28.82% 11.77% 10.03%
Russell 1000 Value Index -2.33% -2.33% 25.16% 11.16% 9.86%
Lipper Multi-Cap Value Fund Average -1.72% -1.72% 26.22% 11.31% 9.43%
Lipper Percentile Rank 27% 39%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 637 (1 Year) and 538 (5 Year). Gross Expense Ratio 1.03%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Small Cap Equity Fund-I Shares -7.53% -7.53% 23.80% 11.21% 9.49%
Russell 2000 Index -9.63% -9.63% 14.82% 12.02% 10.61%
Lipper Small Cap Fund Average -6.53% -6.53% 25.09% 10.65% 9.75%
Lipper Percentile Rank 58% 40%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 842 (1 Year) and 722 (5 Year). Gross Expense Ratio 1.14%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
5 Years
( As of 12/31/21)
Since Inception
( As of 12/31/21)
International Equity-I Shares -2.18% -2.18% 11.31% 11.38% 7.73%
FTSE All World Ex US Index -3.63% -3.63% 8.66% 10.21% 6.61%
Lipper International Multi-Cap Fund Average -3.37% -3.37% 10.18% 8.96% 5.69%
Lipper Percentile Rank 36% 2%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 342 (1 Year) and 269 (5 Year). Gross Expense Ratio 1.33%, Net Expense Ratio 1.10%.

Real Estate Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Real Estate-I Shares -5.58% -5.58% 34.82% 16.23%
FTSE Nareit Equity REITs Index -6.85% -6.85% 43.24% 12.64%
Lipper Real Estate Average -7.41% -7.41% 38.42% 13.76%
Lipper Percentile Rank 83%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Real Estate Number of Funds in Category: 251 (1 Year) Gross Expense Ratio 1.34%, Net Expense Ratio 1.00%.

Long-Short Equity Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
Since Inception
( As of 12/31/21)
Long-Short Equity – I Shares 3.75% 3.75% 16.74% 1.93%
HFRX Equity Market Neutral Developed Index 0.48% 0.48% 0.97% -1.77%
Lipper Alternative Long/Short Average -1.77% -1.77% 13.71% 10.13%
Lipper Percentile rank 40%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Alternative Long/Short Equity Number of Funds in Category: 235 (1 Year) Gross Expense Ratio 2.17%, Net Expense Ratio 1.73%.

U.S. All Cap Index Fund

One Month
( As of 1/31/22)
YTD
( As of 1/31/22)
1 Year
( As of 12/31/21)
Since Inception
( As of 12/31/21)
U.S. All Cap Index – I Shares -5.95% -5.95% 27.04% 24.25%
Knights of Columbus U.S. All Cap Index -5.95% -5.95% 27.30% 24.75%
Lipper Multi-Cap Core Average -6.17% -6.17% 23.80% 20.36%
Lipper Percentile rank 30%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Core Number of Funds in Category: 641 (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.