Market Insights


January 2020

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

As the end of the year is upon us, I’m reflecting on both the year behind and what lies ahead. I’m often described, by people that know me, as high-energy which is partly driven by my desire to keep learning and an absolute fascination with people. It is amazing what you can learn by listening to folks from different walks of life with varying perspectives. The other side of my personality is very introspective which drives my view that my life’s journey is to use self-reflection and learning to be a better husband, father, brother, friend, boss, colleague...you get the point. It was with introspection that I penned this essay, just before Christmas, sitting at my kitchen table, sipping coffee and listening to Christmas music. I will confess, I love the Trans-Siberian Orchestra (I played guitar for years and love their guitar work) and “O Holy Night” is my absolute favorite Christmas song. But I digress.

I was considering the juxtaposition of Washington and the rest of the country, perhaps, the real world! As an avowed political junkie, I consumed quite a bit of the impeachment inquiry and the histrionics from the Democrats that President Trump represents a clear and present danger, an existential threat to our republic, the source of global warming (okay that’s an exaggeration) and so forth. I believe the articles of impeachment selected are somewhat vague and when I began to pen this piece, they had not yet been delivered to the Senate. We truly have moved to the ridiculous and I am fully of the belief that our elected officials are completely divorced from reality.

I say this because back on earth the equity markets continue to climb higher, the economy progresses and most consumers are feeling pretty good about their given set of circumstances. This is based on continuing good news in the employment market, continued strong wages and continued strong consumer spending. The employment market is not perfect as people are working, though maybe not at their most productive levels. Nonetheless, we continue to see enough strength in the economy to take the slightly better than 2% growth from 2019 and propel it to 2020. The equity market seems to have discounted the impeachment, anticipating that the Senate will not convict. As I finish this essay on January 3rd, the latest news indicates there are emails causing the Democrats to seek the presence of witnesses in any impeachment hearings versus the no witness hearings that have been suggested by Senator McConnell. In my view, for either side to claim the moral high ground that their actions have been nonpartisan and focused on the best for the country brings the argument to the height of hypocrisy. This entire process has been political and will end through a political process.

Looking in the rear-view mirror, not even the most ardent bull forecasted the type of strong returns we have seen in the stock market. It’s hard to say how much, but we believe some of the expected equity market gain from 2020 has been pulled forward. In our opinion, this means that the economy will need to remain strong, earnings will have to grow, and we will need to see resolution of the trade spat with China to avoid a serious correction. As it appears, step one in the China trade deal is moving towards fruition, while the devil is in the details which hopefully means we will move toward a more complete trade deal that benefits both countries and enhances global trade.

On the political front, it appears that markets have essentially discounted a Democratic vote to impeach followed by a Republican vote to acquit. A different outcome, in our opinion, will be destabilizing to the financial markets. The more recent escalations with Iran add another dimension to geopolitical risk that could have a negative effect on markets and the economy if these issues escalate further.

At Knights of Columbus Asset Advisors, we are very excited about 2020. We have moved expeditiously through the integration of our new Boston Advisors colleagues and we now number more than 40 professionals dedicated to asset management and analysis, marketing, client service, compliance, operations and administration. Our next milestone is February 27, 2020 which marks the five-year track record for our original six mutual funds. As many of you know, we launched our Global Real Estate and Long/Short Equity strategies during the fourth quarter 2019; our last (and I do mean last) new product was launched on December 31st. We have created a USCCB compliant, U.S. all cap equity index and a new, passive mutual fund strategy which track the Knights of Columbus All Cap Equity Index1.

The creation of the index fund is not a departure from our belief in active management and one should not expect a suite of passive products to be developed behind this offering. Rather, we recognize a number of investors are seeking to passively manage part of their exposure, without compromising their adherence to Catholic investing guidelines, and we wanted to address the need. Further, as investment advisor and service provider to Knights of Columbus Charitable Fund, we believe that this will be an attractive option for many of the Donor-Advised Fund participants and wanted to be sure that we offered a broad array of options for that program.

As I sat back to reflect on the year and think about what lies ahead, I am so proud of our team. The fixed income group in New Haven really dug in this year and I am so pleased with our absolute and relative performance that follows on the next few pages. In a tough market, they continued to find value. Our equity team in Boston continued to perform well in value and small cap and we are seeing progress in growth and international equity. We expect more good things to come. The travel between the two offices of investment and marketing/client service professionals has been encouraging. Coming from a big Italian family, the new family is gelling quite nicely!

I hope you all had a blessed and Merry Christmas and I wish you all a Happy New Year! I am humbled by the clients we have gained, and the assets entrusted to our care. We look forward to serving you through 2020 and beyond!

Until next month.



1 The Knights of Columbus® All Cap Index consists of all common stocks and real estate investment trusts in the Solactive US Broad Market Index (the “Market Index”) excluding companies that are determined by Institutional Shareholder Services (“ISS”) to be involved with enterprises that conflict with the USCCB Guidelines. The Market Index includes the 3,000 U.S. companies with the largest free-float market capitalizations.

Core Bond Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Core Bond Fund-I Shares 0.03% 9.78% 9.78% 4.45% 3.24%
Bloomberg Barclays US Aggregate Bond Index -0.07% 8.72% 8.72% 4.03% 2.91%
Lipper Core Bond Fund Average -0.03% 8.69% 8.69% 3.80% 2.70%
Lipper Percentile Rank 17% 12%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 512 (1 Year) and 452 (3 Year). Gross Expense Ratio 0.87%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Limited Duration Fund-I Shares 0.20% 4.39% 4.39% 2.29% 1.69%
Bloomberg Barclays Government/Credit 1-3 Year Index 0.24% 4.03% 4.03% 2.15% 1.65%
Lipper Short Investment Grade Debt Fund Average 0.25% 4.45% 4.45% 2.38% 1.85%
Lipper Percentile Rank 54% 56%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Short Investment Grade Debt Funds. Number of Funds in Category: 365 (1 Year) and 314 (3 Year). Gross Expense Ratio 0.84%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Large Cap Growth Fund-I Shares 2.84% 30.68% 30.68% 16.31% 10.16%
Russell 1000 Growth Index 3.02% 36.39% 36.39% 20.49% 13.97%
Lipper Multi-Cap Growth Fund Average 2.07% 31.38% 31.38% 17.67% 10.82%
Lipper Percentile Rank 55% 63%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 549 (1 Year) and 493 (3 Year). Gross Expense Ratio 1.10%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Large Cap Value Fund-I Shares 3.02% 28.44% 28.44% 10.74% 8.70%
Russell 1000 Value Index 2.75% 26.54% 26.54% 9.68% 8.42%
Lipper Multi-Cap Value Fund Average 2.49% 24.84% 24.84% 8.61% 7.08%
Lipper Percentile Rank 22% 17%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 463 (1 Year) and 397 (3 Year). Gross Expense Ratio 1.11%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Small Cap Equity Fund-I Shares 1.56% 24.19% 24.19% 6.54% 5.93%
Russell 2000 Index 2.88% 25.52% 25.52% 8.59% 7.95%
Lipper Small Cap Fund Average 2.58% 23.70% 23.70% 6.49% 6.72%
Lipper Percentile Rank 45% 49%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 922 (1 Year) and 832 (3 Year). Gross Expense Ratio 1.17%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
International Equity-I Shares 4.55% 18.02% 18.02% 10.62% 5.80
FTSE All World Ex US Index 4.35% 22.20% 22.20% 10.29% 5.21%
Lipper International Multi-Cap Fund Average 3.47% 20.63% 20.63% 8.43% 3.87%
Lipper Percentile Rank 80% 6%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 422 (1 Year) and 368 (3 Year). Gross Expense Ratio 1.39%, Net Expense Ratio 1.10%.

Global Real Estate

One Month
(as of 12/31/19)
YTD
(as of 12/31/19)
1 Year
(as of 12/31/19)
3 Years
(as of 12/31/19)
Since Inception
(as of 12/31/19)
Global Real Estate-I Shares 2.63% 4.99% - - -
FTSE EPRA/NAREIT Developed Index 0.63% 1.96% - - -
Lipper Real Estate Average -0.25% 3.70% - - -
Lipper Percentile Rank - -

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Real Estate Classification. Number of Funds in Category: 254 (1 Year) and 224 (3 Year). Gross Expense Ratio 1.43%, Net Expense Ratio 1.00%.

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, 3 year, and Since Inception periods are annualized. The inception date for each of the funds is February 27, 2015

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 29, 2020.

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.

Consumer Price Index – The Consumer Price Index is a measure that examines the weighted average of prices of a basket of consumer goods and services.

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 – benchmark 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 162 out of 364 funds measured for the one year ranking period and ranked 185 out of 315 funds measured for the three year ranking period as of September 30, 2019.

Lipper Core Bond Classification – benchmark 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 89 out of 512 funds measured for the one year ranking period and ranked 44 out of 451 funds measured for the three year ranking period as of September 30, 2019.

Lipper Multi-Cap Growth Classification – benchmark 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 433 out of 566 funds measured for the one year ranking period ranked and 347 out of 508 funds measured for the three year ranking period as of September 30, 2019.

Lipper Multi-Cap Value Classification – benchmark 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 130 out of 448 funds measured for the one year ranking period and ranked 19 out of 387 funds measured for the three year ranking period as of September 30, 2019.

Lipper Small-Cap Core Classification – benchmark 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 639 out of 953 funds measured for the one year ranking period and ranked 472 out of 844 funds measured for the three year ranking period as of September 30, 2019.

Lipper International Multi-Cap Core Classification – benchmark 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 246 out of 415 funds measured for the one year ranking period and ranked 16 out of 359 funds measured for the three year ranking period as of September 30, 2019.