Market Insights


October 2020

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

As I sat down to pen my monthly essay for October reviewing the markets of September, there is a side discussion I wanted to focus on. On October 31st, Father Michael J. McGivney, Founder of the Knights of Columbus, will be beatified. After this ceremony, he will forever be known as Blessed Father Michael McGivney. Forever, will hopefully be short lived, because a second miracle assigned to his intercession will raise him from Blessed to Saint Father Michael McGivney. I pray for the day this is to be upon us.

In 2014, when we began building Knights of Columbus Asset Advisors (“KoCAA”), we spent some time thinking about how our new investment business would align with the vision our Founder had for our Order. When the Order was founded, its focus on protecting widows and orphans led to the incredible insurance program that we offer our members today. As we conceived KoCAA, we viewed this new business as an extension of Father McGivney’s vision by offering financial products with competitive fees while only holding investments that comply with Catholic teachings. Working earnestly to generate competitive rates of return, we believe having our customers know that the profitability of our endeavor will support the very ideals that are important to them. In short, we are striving every day to provide KoCAA clients with investment bases constructed of “value with values”. Humbly, we strive to live up to this ideal each and every day. 

Well, as promised, election silly season is upon us and there will be no shortage of back and forth until election day. The first Presidential Debate was on September 29th, and as an avowed political junkie, this was “must see” TV for me. I must admit it was not the most elegant debate in history with President Trump aggressively interrupting Joe Biden and Biden calling the President a clown and telling him to shut up. Not pretty. Perhaps each was playing to their base or trying to convince the undecided voters that the other is unfit for office.

Back in “market land”, the stock market was down a bit more than 4.5% during September, as measured by the S&P 500[1]. Over the same period, the 10-Year Treasury was range bound between 64 and 72 basis points indicating, in our view, that the Federal Reserve’s (“Fed”) “lower for longer” mantra is in the hearts and minds of investors. A careful read of the Fed’s minutes after the last meeting did indicate that the Fed would allow the economy to run hot, meaning that inflation could stay above 2%, and perhaps meaningfully above 2%, before the Fed would react. Ultimately, I believe that the Fed wants to see employment continue to expand while avoiding deflation at all costs. In past essays, I have discussed deflation, so I won’t rehash that here, but suffice it say, there is no known cure for deflation that has worked in a short period.

In looking at the economy, we are seeing accelerating expectations from the consumers as the Conference Board Consumer Expectation Index increased from 86.3 to 101.8 for the one month period ending September 30, 2020. According to the numbers, consumers are expecting that things will get better when they look at current conditions; their expectations jumped from 85.8 to 98.5 at the beginning of September through the end of the month as measured by the Conference Board Present Conditions Index[2]. Inflation is tracking modestly higher, as the Consumer Price Index[3] (“CPI”) headline rate increased by 0.3% to 1.3% and CPI ex Food and Energy[4] increased by 10 basis points to 1.7% at the end of August 2020. We are still seeing other economic indicators slowly improve. Ultimately, we are closely watching employment as in our view the reabsorption of laid off workers, coupled with confidence and consumer spending will be the path to lasting economic recovery.

I suppose you cannot discuss the world today without discussing COVID-19 (“Covid”). There have been a variety of voices discussing this from President Trump to Drs. Fauci and Birx to Democratic Party Leaders Nancy Pelosi and Chuck Schumer. I have eschewed all political rhetoric on Covid and default to Hans Mikkelsen of Bank of America Securities. Hans is an excellent analyst and is focused on facts, not politics. We asked Hans to join one of our internal analyst meetings and he commented how the number of Covid tests have vastly increased and how the positivity rate is not accelerating and how hospitalizations are continuing to decrease. It is tough to find this in the mainstream media because in our view right leaning media only discusses how the President has handled this well and the left media (which appears to be the preponderance of what is out there) holds the President personally responsible for each and every death. As if it were that simple. 

I have been thoroughly impressed with the speed of vaccine development as well as the new therapies that are emerging for Covid. Further, the medical professionals, God bless them all, have learned more about how to treat the virus. Does anyone remember the scramble for ventilators? In any event, we believe that true progress remains tethered to the emergence of therapies and a safe and widely available vaccine. When these both emerge, we do believe that true economic healing can begin.

Speaking of healing, in our view, we need to heal as a nation. The rhetoric from the extreme edges of liberals and conservatives have this country extremely divided. We don’t speak of differences in opinion, we speak of political opponents. We need a hero to help us see the benefit of America in helping to lift people up and the opportunity this country provides. I am the son of an immigrant family and saw how my family worked hard and was able to succeed. I’d like to think we, as a society, can continue to improve upon this, learn from our past mistakes and reach our potential of a more perfect union. 

Finally, I want to return to Father McGivney. I joined the Knights of Columbus in 1994 and have enjoyed the hands-on charitable efforts I have been involved in from the very beginning. I remember first reading Columbia[5] and noticing the eventual change in smiling faces from Virgil Dechant to Carl Anderson. Little did I know then that I would come to know both and call them both friends and work for Supreme Knight Anderson. It has been an amazing ride and there are still miles to go. I often wonder what Father McGivney would think if he could see the size and scope of the Order. I think he would smile and be impressed at how we have grown. I am excited to attend his Beatification and pray for his Canonization. This Order, though not perfect, has accomplished many great things and we continue his work of caring for the needy and the outcast. I am truly better a person because of my twenty-five plus years as a Knight and continue to marvel at this amazing Order conceived by a humble parish priest. A hero indeed!

Until next month.



1 S&P 500 - The S&P 500 or Standard & Poor’s 500 Index is a market-capitalization-weighted index that measures the value of the stocks of the 500 largest U.S. publicly traded companies.

2 Information for the Conference Board Consumer Expectations and Present Conditions Indices reflects current data for the period beginning August 31, 2020 through September 30, 2020.

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

4 Consumer Price Index ex Food and Energy – A measure of price movements by the comparison between retail prices of a representative shopping basket of goods and services that excludes volatile products such as food and energy.

5 Columbia – An internally generated, proprietary magazine distributed to Knights of Columbus members on a monthly basis.

Core Bond Fund

One Month
(as of 9/30/20)
YTD
(as of 9/30/20)
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 0.12% 5.77% 6.11% 4.33% 3.83%
Bloomberg Barclays US Aggregate Bond Index -0.05% 6.79% 6.98% 4.18% 3.72%
Lipper Core Bond Fund Average -0.06% 6.68% 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 9/30/20)
YTD
(as of 9/30/20)
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 0.12% 2.69% 3.31% 2.10% 1.95%
Bloomberg Barclays Government/Credit 1-3 Year Index 0.01% 3.12% 3.73% 2.09% 1.99%
Lipper Short Investment Grade Debt Fund Average 0.03% 2.45% 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 9/30/20)
YTD
(as of 9/30/20)
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 -4.00% 20.55% 32.98% 15.72% 12.44%
Russell 1000 Growth Index -4.70% 24.33% 37.53% 20.10% 16.43%
Lipper Multi-Cap Growth Fund Average -2.69% 24.29% 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 9/30/20)
YTD
(as of 9/30/20)
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 -2.73% -13.54% -6.28% 7.35% 4.72%
Russell 1000 Value Index -2.46% -11.58% -5.03% 7.66% 4.92%
Lipper Multi-Cap Value Fund Average -2.88% -13.30% -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 9/30/20)
YTD
(as of 9/30/20)
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 -1.38% -9.49% -1.86% 4.93% 3.25%
Russell 2000 Index -3.34% -8.69% 0.39% 8.00% 5.12%
Lipper Small Cap Fund Average -3.88% -15.03% -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 9/30/20)
YTD
(as of 9/30/20)
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 -2.63% -3.81% 4.27% 7.99% 4.27%
FTSE All World Ex US Index -2.27% -4.83% 3.83% 6.81% 3.58%
Lipper International Multi-Cap Fund Average -2.04% -6.31% 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 9/30/20)
YTD
(as of 9/30/20)
QTD
(as of 9/30/20)
1 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Real Estate-I Shares -3.30% -10.92% 3.37% - -6.47%
FTSE EPRA/NAREIT Developed Index -3.26% -17.54% 1.44% - -18.16%
Lipper Real Estate Average -3.01% -19.09% 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 9/30/20)
YTD
(as of 9/30/20)
QTD
(as of 9/30/20)
1 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
Long-Short Equity – I Shares -2.84% -14.45% -5.22% - -14.28%
HFRX Equity Market Neutral Developed Index -0.83% -6.85% -1.94% - -7.49%
Lipper Long-Short Average -0.18% 5.61% 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 9/30/20)
YTD
(as of 9/30/20)
QTD
(as of 9/30/20)
1 Years
(as of 9/30/20)
Since Inception
(as of 9/30/20)
U.S. All Cap Index – I Shares -3.73% 5.21% 9.17% - 5.21%
Knights of Columbus U.S. All Cap Index -3.75% 5.66% 9.19% - 5.66%
Lipper Large Blend Average -2.99% 1.97% 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.