Market Insights


April 2022

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

Well, the first quarter is in the book and some of the old problems are still with us, some of the new issues are problematic and we are still looking to discern the path and severity of the inflationary environment. Starting with inflation, I have written on numerous occasions that the Fed was willing to risk inflation by allowing the economy to run hot to avoid deflation. I do not think Jerome Powell thought that he would see inflation at its current levels. To be fair, I do not think there was a Fed model that priced in a massive energy shock due to a Russian invasion of Ukraine. But here we are!

The price of gasoline has risen dramatically as well as continued upward pressure on food and other commodities. The Fed has made their first rate increase and it appears that all roads lead to a Fed Funds rate of about 2.5%. Will they stop there? We believe the stopping point for the Fed will be getting inflation under control, and that means an inflationary environment of 2-3%. Clearly, there is work to do before we see that inflation level again. The cost of energy is one of the most significant contributors to the recent price inflation. Once Russia invaded Ukraine, there was concern that the Russians would disrupt natural gas shipments to Europe. This caused a significant spike in the price of both natural gas and oil. Europe is massively dependent on imports and very dependent on fossil fuels from Russia. Unfortunately, the Biden administration largely squashed the ability of the United States to be the marginal producer. We also made a pivot to Asia from Saudi Arabia and the Saudis do not seem to be too interested in bailing out the U.S. by increasing production. We have had a few folks express happiness about the price of energy, hoping this will spur greater use of electric vehicles. These are the same people that forget that the very electricity that powers these vehicles is largely produced by fossil fuels. I guess these are also the same people that moved from “global warming” to “climate change.” Keep in mind that because our climate has been changing since the beginning of time, these folks will not be out-of-step with whatever change to climate happens to be occurring at the moment!

For the first quarter, we saw the S&P 500 Index return -4.6% and the Bloomberg Barclays Aggregate Bond Index return -5.9%1. Since the end of the year, the 10-year Treasury increased from a year end yield of 1.51% to 2.34% as of March 31,20222. Rising interest rates put pressure on equities, particularly some growth stocks that were trading at very large multiples. We believe that the current environment is going to continue to favor stock pickers over naïve passive strategies. Coming into the year, we believed that stocks would perform in line with earnings growth expectations, and we were forecasting earnings to increase in the mid to high single digits. This is a far cry from the S&P’s 28% return in 20213. Taking into account the inflation spike that followed the Russian invasion of Ukraine, it is logical that the path for equities will be somewhat dependent on a reasonable resolution of the situation.

Automatic Data Processing (ADP) estimated that the U.S. economy added 455,000 jobs last month and unemployment now stands at 3.6%, the lowest point since the start of the pandemic4. The labor participation rate moved up 0.1% to 62.4% and this is 1% lower than the participation rate in February 20205 , just before Covid hit the U.S.6 . It is somewhat interesting that the economy is still adding jobs at a time that product and wage inflation are both increasing. In general, most of the economic statistics are showing a level of stability or improvement. The one statistic that is flashing red is the Index of Leading Indicators.

Last April, the Index of Leading Indicators was growing as 12.3% on a year-over-year basis as the Covid rebound was well underway. We had slowly trended down to an annual growth rate of 7.2% in January, but we saw a 40-basis point improvement to 7.6% after the February release7. For my over 30 years in the markets, this has been one of my favorite indices because the index has been fairly predictive in indicating economic activity 6-12 months forward. This downward trend, coupled with the recent inversion of the rates on 2-year and 10-year Treasury Notes has many prognosticators predicting a recession in 2023. I am never dogmatic about these items because many things can change and change quickly. For example, if there is a resolution in Ukraine and the U.S. renews energy production, we could see a significant reduction in energy prices, as well as other prices, and this will reduce inflationary pressures and may keep us off the path to recession. By the way, I am not predicting a recession on the horizon. Our focus is watching what this benchmark is telling us, particularly in light of other economic indicators. We are seeing that the economy has slowed down a bit and is now faced with multiple headwinds of higher inflation, rising wages, a scarcity of workers, and a return of geopolitical issues, currently Ukraine, but Taiwan could be next.

What is an investor to do? We continue to focus on long-term investing because trying to figure out what will happen next, when it will happen, and make these timing decisions with precision is all but impossible. As always, we go back to the fundamentals of asset allocation and prudent capital planning. If nothing has changed with respect to time horizon or risk tolerance, we advise against market timing. That said, please reach out to KoCAA if you would like to discuss any of these matters further.

As we approach Holy Week and the Easter Tridium I am filled with the anticipation of Christ’s Resurrection and equally saddened by the situation in Ukraine. Historians will debate the merits of provocation by the eastward march of NATO and the overt aggression by Vladimir Putin and his regime. At this moment, I am simply dismayed by the level of human suffering of the Ukrainian people. I am also immensely proud of my Brother Knights as we, led by Worthy Supreme Knight Patrick Kelly, have raised about $10 million that supports Ukrainian relief efforts, both now and into the future. As in many past catastrophes, Knights are on the ground and doing what is necessary to help those most in need. As we approach Easter, please keep the Ukrainian people in your prayers.

Until next month.



[1] Source: Bloomberg as of 3/31/2022
[2] Source: Bloomberg
[3] Source: Bloomberg as of 12/31/2021
[4] Source: Bloomberg as of 3/31/2022
[5] Source: Bloomberg as of 3/31/2022
[6]Source: Bloomberg as of 3/31/2022
[7] Source: Bloomberg as of 3/31/2022

Core Bond Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Core Bond Fund-I Shares -2.84% -6.22% -4.05% 2.40% 2.19%
Bloomberg Barclays US Aggregate Bond Index -2.78% -5.93% -4.15% 2.14% 1.91%
Lipper Core Bond Fund Average -2.70% -5.93% -4.30% 2.21% 1.95%
Lipper Percentile Rank 34% 35%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 513 (1 Year) and 439 (5 Year). Gross Expense Ratio 0.71%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Limited Duration Bond Fund-I Shares -1.21% -2.40% -2.72% 1.36% 1.20%
Bloomberg Government/Credit 1-3 Year Index -1.36% -2.49% -2.91% 1.26% 1.17%
Lipper Short Investment Grade Debt Fund Average -1.28% -2.64% -2.58% 1.47% 1.39%
Lipper Percentile Rank 56% 61%

*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 292 (5 Year). Gross Expense Ratio 0.71%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Large Cap Growth Fund-I Shares 2.33% -11.88% 4.14% 15.54% 12.11%
Russell 1000 Growth Index 3.91% -9.04% 14.98% 20.88% 16.91%
Lipper Multi-Cap Growth Fund Average 1.70% -12.54% -0.08% 17.01% 13.32%
Lipper Percentile Rank 39% 60%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 490 (1 Year) and 410 (5 Year). Gross Expense Ratio 0.90%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Large Cap Value Fund-I Shares 2.87% -0.84% 12.21% 10.95% 9.53%
Russell 1000 Value Index -2.82% -0.74% 11.67% 10.29% 9.38%
Lipper Multi-Cap Value Fund Average -1.97% -0.46% 11.74% 10.42% 9.04%
Lipper Percentile Rank 51% 38%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 618 (1 Year) and 528 (5 Year). Gross Expense Ratio 0.90%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Small Cap Equity Fund-I Shares -0.36% -7.49% 2.03% 9.47% 7.95%
Russell 2000 Index 1.24% -7.53% -5.79% 9.74% 9.02%
Lipper Small Cap Fund Average 0.23% -5.26% 2.16% 9.07% 8.57%
Lipper Percentile Rank 50% 45%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 843 (1 Year) and 729 (5 Year). Gross Expense Ratio 1.05%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
5 Years
( As of 3/31/22)
Since Inception
( As of 3/31/22)
International Equity-I Shares -0.55% -5.70% 0.52% 8.46% 6.56%
FTSE All World Ex US Index 0.32% -5.07% 0.59% 7.42% 5.60%
Lipper International Multi-Cap Fund Average -0.30% -6.59% -1.31% 5.92% 4.47%
Lipper Percentile Rank 47% 2%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 345 (1 Year) and 273 (5 Year). Gross Expense Ratio 1.21%, Net Expense Ratio 1.10%.

Real Estate Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Real Estate-I Shares 5.51% -2.02% 24.77% 13.56%
FTSE Nareit Equity REITs Index 6.55% -3.86% 26.49% 9.59%
Lipper Real Estate Average 5.91% -5.36% 21.52% 9.84%
Lipper Percentile Rank 43%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Real Estate Number of Funds in Category: 253 (1 Year) Gross Expense Ratio 1.16%, Net Expense Ratio 1.00%.

Long-Short Equity Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
Since Inception
( As of 3/31/22)
Long-Short Equity – I Shares 1.57% 4.80% 14.38% 3.79%
HFRX Equity Market Neutral Developed Index -0.32% 0.10% -1.42% -1.54%
Lipper Alternative Long/Short Average 1.05% -1.94% 6.06% 8.34%
Lipper Percentile rank 12%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Alternative Long/Short Equity Number of Funds in Category: 247 (1 Year) Gross Expense Ratio 2.63, Net Expense Ratio 2.28%.

U.S. All Cap Index Fund

One Month
( As of 3/31/22)
YTD
( As of 3/31/22)
1 Year
( As of 3/31/22)
Since Inception
( As of 3/31/22)
U.S. All Cap Index – I Shares 2.90% -6.18% 11.43% 17.90%
Knights of Columbus U.S. All Cap Index 2.91% -6.14% 11.53% 18.37%
Lipper Multi-Cap Core Average 2.51% -5.85% 9.15% 14.91%
Lipper Percentile rank 43%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Core Number of Funds in Category: 647 (1 Year) Gross Expense Ratio 0.92%, 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. 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.

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, 2023.

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 206 out of 368 funds measured for the one-year ranking period and ranked 177 out of 292 funds measured for the five-year ranking period as of March 31, 2022.

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 172 out of 513 funds measured for the one-year ranking period and ranked 153 out of 439 funds measured for the five-year ranking period as of March 31, 2022.

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 189 out of 490 funds measured for the one-year ranking period ranked and 248 out of 410 funds measured for the five year ranking period as of March 31, 2022.

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 318 out of 618 funds measured for the one-year ranking period and ranked 203 out of 528 funds measured for the five-year ranking period as of March 31, 2022.

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 424 out of 843 funds measured for the one-year ranking period and ranked 328 out of 729 funds measured for the five-year ranking period as of March 31, 2022.

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 161 out of 345 funds measured for the one-year ranking period and ranked 6 out of 273 funds measured for the five-year ranking period as of March 31, 2022.

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 110 out of 253 funds measured for the one-year ranking period as of March 31, 2022.

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 29 out of 221 funds measured for the one-year ranking period as of March 31, 2022.

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 277 out of 647 funds measured for the one-year ranking period as of March 31, 2022.