New actively-managed ETF Sponsor: Catholic Investing Guidelines ETF filed

FIS Knights of Columbus Global Belief ETF

Ticker: KOCG
Exchange: NYSE Arca
Expense ratio: 0.75%
Original filing date: March 8, 2021
Listing Date: July 14, 2021
CUSIP: 78433H105
Active: Yes
Index / Benchmark: FTSE All-World index

SUMMARY

Actively-managed ETF that invests globally in companies that are consistent with Catholic values. Avoids companies involved in contraception, pornography, stem cell research/human cloning, weapons of mass destruction, etc.

ANALYSIS

The recent faith-based Inspire ETFs have shown that a much more holistic and inclusive approach to marketing a values-based investment strategy can be successful, with AUM across their eight ETF offerings closing in on $1Billion and management fees almost at $5Million p.a.

This contrasts with previous attempts based on nomenclature and established index clout. In other words, although the methodology of previous faith-based ETFs (FaithShares, Global X CATH and CEFA, etc) may wax lyrical on kindred values to Inspire, they were backed by indices published by the usual suspects like S&P and MSCI).

In the latest entry into faith-based ETFs, we have the FIS Knights of Columbus Global Belief ETF. Although this ETF will be actively-managed, we now have FTSE's participation as the benchmark instead of the underlying index. However, we have the [spiritual?] guidance of an established authority on faith, the US Conference of Catholic Bishops on what are deemed acceptable companies.

The final piece to the success of this product will be the marketing and distribution of the fund(s). Inspire has done a great job with its CEO its Robert Netzly as the face of the investing congregation, and a cohesive story and objective. The Knights of Columbus Asset Advisers do not have a CEO, and is instead led by a serious-looking CIO, flanked by Legal and Strategy. Let's pray their distribution is ready and trained on all things ETF leading up to the day of ascension to listing.

Investment Objective:
Seeks income and long-term growth of capital.

Investment Strategy:

The USCCB Guidelines cover the following areas:

Protecting Human Life

• Abortion
• Contraceptives
• Embryonic Stem Cell/Human Cloning
• Embryonic stem cell research (ESCR);
• Fetal tissue research or stem cell research derived from embryos;
• Human cloning

Promoting Human Dignity

• Human Rights
• Racial Discrimination
• Gender Discrimination
• Access to Pharmaceuticals (e.g. HIV/AIDS)
• Curbing Pornography

Reducing Arms Production

• Production and Sale of Weapons
• Antipersonnel Landmines

Pursuing Economic Justice

• Labor Standards/Sweatshops
• Affordable Housing / Banking

Protecting the Environment
Encouraging Corporate Responsibility

Makes investment decisions consistent with the United States Conference of Catholic Bishops’ Socially Responsible Investing Guidelines (USCCB Guidelines):

i.e. Avoid investments in companies that are believed to be involved with abortion, contraception, pornography, stem cell research/ human cloning, weapons of mass destruction, or other enterprises that conflict with the USCCB Guidelines.

Constituents: 90 ~ 110

Adviser: Knights of Columbus Asset Advisors LLC

Sub-Adviser: Faith Investor Services LLC

Boston Advisors as day-to-day managers

Prospectus is here.

MORE ETF HEARSAY

 

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Principal Investment Strategies of the Fund

Under normal circumstances, the Fund invests at least 80% of its assets (net assets plus any borrowings for investment purposes) in equity securities, including common stock and ADRs and GDRs of international and domestic companies. The Fund may invest in securities of companies with any market capitalization.

The Sub-Adviser employs an “active management” investment strategy in seeking to achieve the Fund’s investment objective. In selecting investments for the Fund, the Sub-Adviser combines quantitative and qualitative analyses that together seek to identify companies that have above-average investment potential. The Adviser first ranks the individual stocks in which the Fund may invest through the use of models that incorporate multiple fundamental factors, with the weightings of the factors in the models varying in relation to the stock’s sector and region and the current market environment. The Sub-Adviser then evaluates highly-ranked securities for purchase based on fundamental data and macroeconomic considerations, while managing the Fund’s exposures to sectors and regions to ensure broad diversification. The Sub-Adviser will generally sell a stock on behalf of the Fund if the stock experiences a rankings decline or extreme price movements, or for risk management purposes.

The Fund makes investment decisions consistent with the United States Conference of Catholic Bishops’ Socially Responsible Investing Guidelines (the “USCCB Guidelines”), and therefore, the Fund is designed to avoid investments in companies that are believed to be involved with abortion, contraception, pornography, stem cell research/ human cloning, weapons of mass destruction, or other enterprises that conflict with the USCCB Guidelines. The policies and practices of the companies selected for the Fund are monitored for various issues contemplated by the USCCB Guidelines. If the Adviser becomes aware that the Fund is invested in a company whose policies and practices are inconsistent with the USCCB Guidelines, the Adviser may sell the company’s securities or otherwise exclude future investments in such company.

The Fund may invest in companies of any market capitalization located anywhere in the world, including companies located in emerging markets. The Fund will focus its investments in all capitalization companies. Foreign securities in which the Fund may invest may be U.S. dollar-denominated

The average market capitalization of the Fund’s portfolio is expected to range from $3 billion to $1.7 trillion. The Fund typically will invest in 90 to 110 portfolio companies. The Fund seeks to outperform the FTSE All-World index.

The Fund will invest in at least three countries (one of which may be the United States) and will invest at least 40% of its total assets at the time of purchase in in equity securities of companies headquartered outside the United States.

During temporary defensive periods (i.e., in response to adverse market, economic or political conditions), the Fund may invest up to 100% of its total assets in liquid, short-term investments, including high quality, short-term securities. The Fund may not achieve its investment objectives under these circumstances. The Sub-Adviser’s determination that it is temporarily unable to follow the Fund’s investment strategy or that it is impractical to do so will generally occur only in situations in which a market disruption event has occurred and where trading in the securities selected through application of the Fund’s investment strategy is extremely limited or absent.

The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of any collateral received).