Market Insights


November 2019

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

We are at an interesting point in the financial markets given a variety of factors occurring within the economy and in the political arenas. With respect to the markets, we have seen corporate earnings come in at or better than expected, and this has buoyed investor confidence for a further market improvement. Despite a “trick” in terms of a down day on Halloween, the Standard and Poor’s 500 Index (“S&P 500”) returned 2.04% for the month of October. Continuing with this theme of market action, the Federal Reserve (“Fed”) lowered its Fed Funds target rate1 to between 1.50% to 1.75% as expected, but Chairman Powell seemed to indicate that this might be the end of interest rate cuts unless the Fed saw significant evidence of further economic weakness. As a result, the 10-year Treasury2  declined on the last day of the month by 8 basis points to end the month at 1.69%.

Even though this is meant to be an October review, I can’t help myself because as I am writing this on November 1st, the employment report was just released and the Nonfarm Payrolls Index3  reported the creation of 128,000 new jobs, beating the estimate of 85,000 new jobs. The unemployment rate4 for the period ending October 31, 2019 increased by 0.1% to 3.6% and underemployment increased 0.1% to 7.0%. At the same time, the labor participation5 rate also increased by 0.1% to 63.2%, tying the highest level of participation this year and the highest since 2013. Even though we saw a slight deterioration in unemployment, the uptick in labor participation explains this move, showing movement back into the labor market by people on the sidelines.

On the political front, Speaker of the US House of Representatives Nancy Pelosi initiated the vote to “start” the impeachment inquiry of President Trump whilst California Congressman Adam Schiff has largely been conducting this inquiry for about a month. Both sides of the aisle appear to anticipate that impeachment will accrue to their respective benefit. The vote in Congress was split right down party lines with every Republican voting against and all but two Democrats voting in favor. I really question how many people outside of ardent political junkies actually pay attention? I suspect if the employment market continues to perform well, people outside of Washington will likely yawn at the political theatrics occurring inside the Beltway. The Republicans are betting that Americans will be angered at the Democrats for dragging the country through this process; Democrats have been salivating at impeaching Trump even prior to his occupying 1600 Pennsylvania Avenue. As an avowed political junkie, I’m sure it won’t be boring.

Which brings us to China. The attempt to finalize some form of a trade deal gives the market cause for celebration at the prospect of a path forward, and a hangover as bumps in the road arise. The last pronouncement, as reported by ‘The Hill’6, has been that China does not believe they can achieve a comprehensive deal completed with Trump. This could be an attempt by China to appeal to our independent voters with the subtext being “if you want the trade war to end a more moderate voice is needed”. I believe the reality of the current construct of the Democratic party is their concern with increasing entitlements, so China may believe they will have greater success dealing with a Democrat than Trump. My personal supposition is that if Trump wins another election, he will look to extract the deal he wants and may really dig in his heels. The question is can China risk Trump being reelected and remain in this trade “no man’s land” for the next six years?

We are looking at the remainder of this year and beginning to think about 2020 and our “wall of worry” persists. The yin and yang of the markets and politics will likely become more intertwined as the impeachment effort gets under way. If the “evidence” supports that Trump was pressuring Ukraine to investigate Biden’s son it can be proven and there was a “quo” in the quid pro quo charge, the likelihood of a House impeachment vote increases. The shocker would be if the Republican controlled Senate voted to impeach the President. Therefore, we ultimately think this is a “nothing burger”. Washington leaks like a sieve with extra-large holes, and the quid pro quo being pressed by the Democrats does not seem to justify the needed Republicans crossing the aisle in order to support Democratic Senators’ conviction of the President. Political theater at its finest! However, the attitude of the electorate is the real wildcard. Do independents across the country get swayed and cause a greater majority for Democrats in the House and flip the Senate? Do these same independent voters get turned off by politics as usual and flip the house and cause a larger Republican majority in the Senate? This is a broader issue which could present implications for legislation and judicial appointees.

We are looking at the end of earning season and trying to determine whether or not economic activity will spur inflation and keep the employment market strong. We suspect that the economy’s strength, or lack thereof, will be a key determinant in a second term for President Trump. I am looking to see if the current month’s releases of economic indicators show momentum or retrenchment. While a month doesn’t make a trend, these releases coupled with uncertainty could lead to corporate inactivity, less consumer spending and sideways to downward financial markets. If, however, the reverse is true, further gains could be in store.

Until next month.



1 Fed funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis.

2 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance.

3 Non-farm payrolls are a summation of payroll jobs in goods, construction, and manufacturing companies in the US, excluding farm workers, private household employees, or non-profit organization employees.

4 The unemployment rate is defined as the percentage of unemployed workers in the total labor force.

5 The labor participation rate is the total number of people or individuals who are currently employed or in search of a job.

Core Bond Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
Core Bond Fund-I Shares 0.29% 9.75% 10.43% 3.46% 3.35%
Bloomberg Barclays US Aggregate Bond Index 0.30% 8.85% 10.30% 2.92% 3.03%
Lipper Core Bond Fund Average 0.27% 8.76% 9.49% 2.80% 2.81%
Lipper Percentile Rank 17% 10%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Core Bond Funds. Number of Funds in Category: 512 (1 Year) and 451 (3 Year).
Gross Expense Ratio 0.87%, Net Expense Ratio 0.50%.

Limited Duration Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
Limited Duration Fund-I Shares 0.30% 4.07% 4.44% 1.95% 1.65%
Bloomberg Barclays Government/Credit 1-3 Year Index 0.35% 3.78% 4.64% 1.82% 1.62%
Lipper Short Investment Grade Debt Fund Average 0.28% 4.14% 4.26% 2.11% 1.83%
Lipper Percentile Rank 45% 58%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Short Investment Grade Debt Funds. Number of Funds in Category: 364 (1 Year) and 318 (3 Year).
Gross Expense Ratio 0.84%, Net Expense Ratio 0.50%

Large Cap Growth Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
Large Cap Growth Fund-I Shares 2.87% 21.87% -2.87% 12.75% 8.40%
Russell 1000 Growth Index 2.82% 26.77% 3.71% 16.89% 12.30%
Lipper Multi-Cap Growth Fund Average 1.98% 23.08% 1.09% 14.18% 9.33%
Lipper Percentile Rank 77% 68%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Growth Funds. Number of Funds in Category: 566 (1 Year) and 506 (3 Year).
Gross Expense Ratio 1.10%, Net Expense Ratio 0.90%.

Large Cap Value Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
Large Cap Value Fund-I Shares 1.45% 20.20% 2.01% 11.49% 7.29%
Russell 1000 Value Index 1.40% 19.46% 4.00% 9.43% 7.22%
Lipper Multi-Cap Value Fund Average 1.44% 17.98% -0.45% 8.45% 5.75%
Lipper Percentile Rank 29% 5%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Multi-Cap Value Funds. Number of Funds in Category: 448 (1 Year) and 387 (3 Year).
Gross Expense Ratio 1.11%, Net Expense Ratio 0.90%.

Small Cap Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
Small Cap Equity Fund-I Shares 2.84% 17.79% -9.16% 6.75% 4.40%
Russell 2000 Index 2.63% 17.18% -8.89% 8.23% 6.19%
Lipper Small Cap Fund Average 1.91% 16.73% -7.36% 7.00% 5.33%
Lipper Percentile Rank 67% 56%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: Small-Cap Core Funds. Number of Funds in Category: 953 (1 Year) and 844 (3 Year).
Gross Expense Ratio 1.17%, Net Expense Ratio 1.05%.

International Equity Fund

One Month
(as of 10/31/19)
YTD
(as of 10/31/19)
1 Year
(as of 09/30/19)
3 Years
(as of 09/30/19)
Since Inception
(as of 09/30/19)
International Equity-I Shares 3.13% 12.28% -3.68% 7.95% 4.28
FTSE All World Ex US Index 3.59% 16.03% -0.81% 6.78% 3.52%
Lipper International Multi-Cap Fund Average 3.32% 15.23% -2.92% 5.02% 2.29%
Lipper Percentile Rank 59% 4%

*Lipper Percentile Rank is based on risk-adjusted performance. Lipper Category: International Multi-Cap Core. Number of Funds in Category: 415 (1 Year) and 359 (3 Year).
Gross Expense Ratio 1.39%, Net Expense Ratio 1.10%.

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.