Market Insights


November 2021

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

Today is a very exciting day at Knights of Columbus Asset Advisors as the firm has started to reopen the building and began welcoming people back to the office. The investment team was the first group to leave the building and that was on March 12, 2020. Little did we know that the next time we would be back on our trading floor would be November 1, 2021! I am blessed because I work with a group of very smart and talented people and, on a personal basis, I immensely enjoy being with these folks. Welcome back and let’s get after it!

In the United States (“U.S.”), the delta variant appears to be waning and there seems to be no significant variants taking the place of delta. That does not mean we believe the Covid epidemic is over, but rather that it will become endemic and bed more like the seasonal flu. Furthermore, we need some of our state and local governments to decide that we can begin to transition back to normal. In Connecticut, our governor has left the masking and social distancing decisions to the cities and towns, resulting in significantly different regulations throughout.

The masking discussion is a segue to the significant differences in opinion within our group of federal elected officials. The divide between the two major parties is getting wider and more distinct. In a very real way, the Virginia gubernatorial election seems to be a referendum on the leaning of the country as a whole. In my opinion, the progressive wing of the Democratic party believes that they have a mandate to drastically increase the social safety net and redefine “infrastructure”. Alas, they have a slim majority in Congress and the Democrats can’t afford to lose a single vote in the Senate. For the markets, gridlock is generally positive because it means Congress can’t do anything to seriously alter the economy.

We are starting to see some of the economic pain from the gridlock that exists in the supply chain. Earlier this year, I was in San Francisco; the condition of the city is a story for another day. While near the port, I counted over 30 container ships in the harbor; the port of San Francisco is much smaller than the port of Los Angeles and the backup of container ships has been well chronicled in the press. This morning we saw the Institute of Supply Management’s1 gauge of factory activity fall to 60.8 in October 2021 from 61.1 in September 2021. This result was stronger than the consensus projection of 60.5. Any reading above 50 indicates an expanding economy and a reading below 50 indicates economic contraction. We are expanding at a decreasing rate. However, when you look beneath the ISM number, one can see that a measure of inventories at factories is high because of supply chain disruption so the expansion is not what it seems. Perhaps, our elected officials should be focusing on “unsticking” the supply chain bottleneck and allow the economy to flow. This could help economic activity and employment and may help ease the portion of the recent uptick in inflation that is associated with the scarcity of certain items.

The other key item we are looking at is the bond market and the potential for the second round of taper tantrum. The first taper tantrum occurred when the Federal Reserve (“Fed”) began cutting the amount of Treasury and mortgage bond purchases in 2013. It’s hard to believe 8 years are in the rearview mirror! There is a certain sense that some market participants understand what is going on in the market. We saw a 25-basis point flattening in 2013 and last month, the curve flattened by about 40 basis points. The increase in short yields around the world will have financing implications as people and companies have been living on cheap money relative to historical borrowing costs. The impact on economic activity is important as we are trying to emerge from Covid and trying to continue to grow the global economy.

Inflation has not cooled at either the headline or core levels and with oil remaining comfortably above $80 per barrel, the likelihood of “transient” inflation is waning. You may have noticed that the Fed has stopping talking about short lived inflation as the combination of increased cost of wages, energy and a variety of price increases for goods and services likely means inflation will be with us for a period of time. If inflation truly rises significantly, we believe the Fed will intervene to increase short rates and cool off the economy, this is of little comfort to those trying to rebuild a business or find proper employment after Covid.

Finally, as we are moving through this quarter’s earnings reporting season, we continue to see relatively strong earnings and many companies are still providing upside surprises. If the supply chain remains snarled, the Christmas selling season may make the upward momentum of earnings subside. We are cautious regarding supply chain issues and this is why we continue to recommend that clients rebalance to, or through, their asset allocation targets, depending on their risk tolerance. For example, if you have an allocation of 60% to equities with a range of 50% to 70%, taking your equity allocation below the 60% target to something between 50% and 60% is a worthwhile consideration. Further, we also recommend that clients consider their financial situation, whether individual or institutional, and assess if anything has changed that could dictate a change in asset allocation. If the answer is yes, please reach out to us so we can have that specific discussion. No one ever said this investing stuff was easy!

We will be back with you in this forum after Thanksgiving. In this intervening period, we should begin to develop some sense of (hopefully) positive progress within the supply chain and further clues on the path of inflation and Covid.

Until next month.



[1] Institute for Supply Management Manufacturing Index is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at more than 300 manufacturing firms.

Core Bond Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 10/31/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Core Bond Fund-I Shares 0.00% -0.51% 0.83% 3.45% 3.37%
Bloomberg Barclays US Aggregate Bond Index 0.03% -1.58% -0.90% 2.94% 3.01%
Lipper Core Bond Fund Average 0.11% -1.19% 0.35% 3.15% 3.07%
Lipper Percentile Rank 26% 29%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 505 (1 Year) and 421 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 9/30/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Limited Duration Fund-I Shares -0.30% -0.04% 0.73% 1.98% 1.76%
Bloomberg Barclays Government/Credit 1-3 Year Index 0.33% 0.24% 0.30% 1.89% 1.73%
Lipper Short Investment Grade Debt Fund Average 0.31% 0.28% 1.76% 2.20% 1.98%
Lipper Percentile Rank 73% 41%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Short Investment Grade Debt Funds. Number of Funds in Category: 371 (1 Year) and 295 (5 Year). Gross Expense Ratio 0.80%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 9/30/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Large Cap Growth Fund-I Shares 6.99% 17.60% 22.01% 18.39% 13.84%
Russell 1000 Growth Index 8.66% 24.20% 27.32% 22.84% 18.02%
Lipper Multi-Cap Growth Fund Average 7.02% 18.35% 27.37% 20.97% 15.97%
Lipper Percentile Rank 82% 72%

*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 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 9/30/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Large Cap Value Fund-I Shares 4.77% 26.00% 38.71% 12.49% 9.29%
Russell 1000 Value Index 5.08% 22.03% 35.01% 10.94% 9.01%
Lipper Multi-Cap Value Fund Average 4.65% 22.97% 28.74% 11.08% 8.62%
Lipper Percentile Rank 45% 23%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 622 (1 Year) and 516 (5 Year). Gross Expense Ratio 1.03%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 9/30/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Small Cap Equity Fund-I Shares 5.43% 26.63% 47.25% 11.94% 8.97%
Russell 2000 Index 4.25% 17.19% 47.68% 13.45% 10.68%
Lipper Small Cap Fund Average 4.68% 22.97% 51.63% 11.37% 9.21%
Lipper Percentile Rank 68% 41%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 838 (1 Year) and 706 (5 Year). Gross Expense Ratio 1.14%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
1 Year
(as of 9/30/21)
5 Years
(as of 9/30/21)
Since Inception
(as of 9/30/21)
International Equity-I Shares 3.33% 11.64% 27.81% 10.89% 7.55%
FTSE All World Ex US Index 2.18% 9.05% 25.06% 9.59% 6.58%
Lipper International Multi-Cap Fund Average 2.52% 10.39% 24.70% 8.27% 5.59%
Lipper Percentile Rank 15% 5%

Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 339 (1 Year) and 264 (5 Year). Gross Expense Ratio 1.33%, Net Expense Ratio 1.10%.

Real Estate Fund

One Month
(as of 10/31/21)
YTD
(as of 10/31/21)
QTD
(as of 9/30/21)
1 Year
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Real Estate-I Shares 4.00% 22.39% 1.35% 30.90% 10.65%
FTSE Nareit Equity REITs Index 7.60% 32.51% 0.98% 37.39% 6.03%
Lipper Real Estate Average 6.71% 29.15% 0.82% 32.98% 8.18%
Lipper Percentile Rank 64%

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 10/31/21)
YTD
(as of 10/31/21)
QTD
(as of 9/30/21)
1 Year
(as of 9/30/21)
Since Inception
(as of 9/30/21)
Long-Short Equity – I Shares -1.53% 8.43% 2.08% 14.49% -1.02%
HFRX Equity Market Neutral Developed Index -1.20% 0.11% 1.11% 4.52% -1.82%
Lipper Long-Short Average 2.68% 11.13% -0.86% 16.30% 8.52%
Lipper Percentile rank 53%

*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 10/31/21)
YTD
(as of 10/31/21)
QTD
(as of 9/30/21)
1 Year
(as of 9/30/21)
Since Inception
(as of 9/30/21)
U.S. All Cap Index – I Shares 6.96% 24.37% 0.03% 34.30% 21.84%
Knights of Columbus U.S. All Cap Index 7.01% 24.71% 0.10% 34.91% 22.45%
Lipper Multi-Cap Core Average 5.94% 20.98% -0.47% 30.07% 17.98%
Lipper Percentile rank 22%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Core Number of Funds in Category: 645 (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 is 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.