Market Insights


December 2020

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

Where to from here? We now know two-thirds of the election equation with the Democrats winning the White House and holding a majority, albeit much smaller, in the House of Representatives. The Republicans have 50 seats in the Senate and Georgia will see two run-off elections to determine the final make-up of the Senate. If the Democrats were to win both seats, that would make the chamber 50/50 and Vice President-elect Harris would hold the tie breaking vote when the new Senate is seated. Senator Joe Manchin (D-West Virginia) has stated already that he will not vote in favor of the filibuster or packing the Supreme Court. Senator Manchin has also gone on the record stating that he will not support any extreme legislation that is mostly embraced by Bernie, “The Squad”[1] and the hard left. However, a 50/50 Senate could allow for much more Democratic led legislation to make it to the President’s desk.

With interest rates so low and more calls for stimulus, many are starting to inquire about the presence of inflation. The first place to look is the composition of the government. In my opinion, a divided government is less likely to lead to the $3 trillion dollar stimulus package that the House voted some months ago. Not that the previous Republican proposal of $1.5 trillion is small potatoes! However, the combination of a continuously active Federal Reserve (“Fed”) and smaller stimulus will be less likely to lead to immediate inflation. Although, we will submit that we believe that the seeds for future inflation are intact, it’s just more likely to be a bit longer tailed before we see any systemic inflation take root within the economy.

The economy, though not perfect, was generally strong leading into COVID-19 so there is some consensus around a resumption of spending and consumption as we move back to “normal”. The key issue will be the financial shape of consumers and small businesses as the pandemic wanes. The goal of the stimulus was to help keep people afloat until such a time that we had herd immunity and/or vaccines to help move us back to normal. As businesses reopen, people return to work and we have a more normal economic rhythm the stimulus would stave off a significant recession. I will comment on vaccines and therapeutics in a moment; however, it seems that another round of stimulus is likely needed. While we are in the lame duck period we are looking to see if a stimulus build tied to government funding will have a better chance of succeeding. In a certain sense, with Georgia hanging in the balance, both sides are salivating over Senate control. Small business and many families hang in the balance, but these are trivial matters to most of our elected officials. In my view, rewarding their base and punishing their enemies is much closer to home.

Moderna, Inc. and Pfizer Inc. have made enormous strides in the vaccine battle. We now have two mRNA vaccines that are showing to be highly effective and without life risking side effects. I received the shingles vaccine two years ago and it was a two-shot regimen. Also, the side effects I experienced sound like what is being described for the new COVID-19 vaccines. I felt feverish, had the chills, headache and other flu-like symptoms. I felt much better 24 hours later and was essentially back to normal within 48 hours. The second shot was a nonevent. If a COVID-19 vaccine is similar, I’ve been there…done that…and will be in line for this vaccine. We are also seeing very regular advance in therapeutics that are both lessening the likelihood of death as well as shortening hospital stays. With the recent increase in positivity and hospitalizations, I believe we need to battle this surge until the vaccine becomes widely distributed and we have reached herd immunity.

Well we have finished the month of November and the S&P 500® Index had a total return of 10.9% for the month and is up 14.0%, year to date through the end of November. The market has been very focused on the advances in vaccines and appears to have looked past the recent surge in COVID-19 cases as well as some softer economic numbers. We believe that the stock market is also largely focused on the prospects for a divided government. If the Democrats sweep Georgia, we think this could be unsettling for the market because of the potential for a more onerous tax policy, less business-friendly legislation, higher government spending and a concern that the most liberal legislative agenda since LBJ occupied the White House would come before the Chamber. In the words of the immortal Ray Charles, “Keeps Georgia on my mind”. We will be watching the runoffs.

The 10 Year Treasury ended October at 0.88% and ended November at 0.84%, although it neared 1.0% on November 11th. As mentioned earlier, Fed activity and the perception of a split government are helping to keep a lid on interest rates. The employment market continues to brighten at the margin and many economic indicators are improving at a declining rate. The market is looking past the current virus surge to the distribution of the vaccine and a consensus is being formed around a vastly improving picture in the second and third quarters of 2021. If this gets pushed off and vaccine acceptance is low or if the current surge proves to be even worse than expected we could see corrective action take place in the market as short termism could outweigh our current longer term optimism.

The last words this month on the election are really focused on the lack of a Blue Wave. I believe it is pretty hard for the Democrats to claim a mandate when the Republicans held onto so many seats in the House and the Democrats have much more to defend in the mid-term elections in two years. I have chuckled a bit at the Squad and some of their pronouncements. They all hail from such reliably Democratic districts in my view that a Democratic cardboard cutout candidate would likely beat a living, breathing Republican. No one got a mandate; the country is divided, and I continue to hope that our elected officials can come together to bind us together before something worse becomes our country’s fate.

We remain constructive and amazed at the speed of the vaccines and the advancement in therapeutics. While we look forward to moving beyond COVID-19, we are not there just yet.

Until next month.



[1] An informal name for the group of women that consist of Alexandria Ocasio-Cortez, Ilhan Omar, Rashida Tlaib, and Ayanna Pressley

Core Bond Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Core Bond Fund-I Shares 1.32% 6.86% 6.11% 4.33% 3.83%
Bloomberg Barclays US Aggregate Bond Index 0.98% 7.36% 6.98% 4.18% 3.72%
Lipper Core Bond Fund Average 1.43% 7.83% 6.90% 4.15% 3.55%
Lipper Percentile Rank 75% 37%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 505 (1 Year) and 411 (5 Year). Gross Expense Ratio 0.84%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Limited Duration Fund-I Shares 0.30% 3.00% 3.31% 2.10% 1.95%
Bloomberg Barclays Government/Credit 1-3 Year Index 0.10% 3.24% 3.73% 2.09% 1.99%
Lipper Short Investment Grade Debt Fund Average 0.60% 3.18% 3.03% 2.28% 2.03%
Lipper Percentile Rank 44% 63%

*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 296 (5 Year). Gross Expense Ratio 0.82%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Large Cap Growth Fund-I Shares 8.69% 27.55% 32.98% 15.72% 12.44%
Russell 1000 Growth Index 10.24% 32.40% 37.53% 20.10% 16.43%
Lipper Multi-Cap Growth Fund Average 11.82% 36.05% 35.61% 16.93% 13.62%
Lipper Percentile Rank 40% 52%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 502 (1 Year) and 395 (5 Year). Gross Expense Ratio 1.05%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Large Cap Value Fund-I Shares 12.48% -3.36% -6.28% 7.35% 4.72%
Russell 1000 Value Index 13.45% -1.00% -5.03% 7.66% 4.92%
Lipper Multi-Cap Value Fund Average -1.51% -6.76% 6.07% 3.53%
Lipper Percentile Rank 45% 24%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 574 (1 Year) and 449 (5 Year). Gross Expense Ratio 1.06%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Small Cap Equity Fund-I Shares 15.14% 4.52% -1.86% 4.93% 3.25%
Russell 2000 Index 18.43% 10.41% 0.39% 8.00% 5.12%
Lipper Small Cap Fund Average 16.56% 1.32% -8.16% 4.97% 2.79%
Lipper Percentile Rank 22% 51%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 882 (1 Year) and 704 (5 Year). Gross Expense Ratio 1.14%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
1 Year
(as of 9/30/20)
5 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
International Equity-I Shares 12.49% 7.23% 4.27% 7.99% 4.27%
FTSE All World Ex US Index 13.49% 5.71% 3.83% 6.81% 3.58%
Lipper International Multi-Cap Fund Average 13.60% 2.75% 1.25% 4.74% 2.24%
Lipper Percentile Rank 19% 1%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 361 (1 Year) and 267 (5 Year). Gross Expense Ratio 1.39%, Net Expense Ratio 1.10%.

Real Estate Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
QTD
(as of 9/30/20)
1 Year
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Real Estate-I Shares 8.67% -5.63% 3.37% - -6.47%
FTSE Nareit Equity REITs Index 10.92% -10.93% 1.44% - -18.16%
Lipper Real Estate Average 13.22% -11.40% 2.33% - -17.50%
Lipper Percentile Rank -

Gross Expense Ratio 1.43%, Net Expense Ratio 1.00%.

Long-Short Equity Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
QTD
(as of 9/30/20)
1 Year
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Long-Short Equity – I Shares 1.86% -12.35% -5.22% - -14.28%
HFRX Equity Market Neutral Developed Index 2.30% -4.19% -1.94% - -7.49%
Lipper Long-Short Average 1.20% 6.92% 1.33% - 6.25%
Lipper Percentile rank -

Gross Expense Ratio 2.03%, Net Expense Ratio 1.70%.

U.S. All Cap Index Fund

One Month
(as of 11/30/20)
YTD
(as of 11/30/20)
QTD
(as of 9/30/20)
1 Year
(as of 9/30/20)
Since Inception
(as of 9/30/20)
U.S. All Cap Index – I Shares 12.48% 15.94% 9.17% - 5.21%
Knights of Columbus U.S. All Cap Index 12.49% 16.57% 9.19% - 5.66%
Lipper Large Blend Average 11.53% 11.72% 8.24% - 1.97%
Lipper Percentile rank -

Gross Expense Gross Expense Ratio 1.22%, 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, 2021.

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.

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 164 out of 371 funds measured for the one year ranking period and ranked 187 out of 296 funds measured for the five year ranking period as of September 30, 2020.

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 381 out of 505 funds measured for the one year ranking period and ranked 152 out of 411 funds measured for the five year ranking period as of September 30, 2020.

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 200 out of 502 funds measured for the one year ranking period ranked and 207 out of 395 funds measured for the five year ranking period as of September 30, 2020.

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 260 out of 574 funds measured for the one year ranking period and ranked 108 out of 449 funds measured for the five year ranking period as of September 30, 2020.

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 196 out of 882 funds measured for the one year ranking period and ranked 359 out of 704 funds measured for the five year ranking period as of September 30, 2020.

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 67 out of 361 funds measured for the one year ranking period and ranked 3 out of 267 funds measured for the five year ranking period as of September 30, 2020.

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.