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Investing in the Church with Knights of Columbus Asset Advisors


Alton J. Pelowski

Supreme Knight Carl Anderson

Supreme Knight Carl A. Anderson is pictured in his office at the Knights of Columbus headquarters in New Haven, Conn. The supreme knight serves as CEO of Knights of Columbus Insurance, the assets of which are invested according to faith-based, ethical principles. (Photo by Tom Serafin)

With more than $97 billion of life insurance in force and managing $20 billion in assets, the Knights of Columbus has been a pillar of financial strength for its members and their families. Managing the assets of the Knights’ top-rated life insurance program, the Order’s investment staff screens portfolios in light of Catholic teachings and has generated positive investment results for the insurance program.

Beginning this month, the Order will offer similar investment strategies to Catholic institutions, making a series of products available to them through a new registered investment advisor subsidiary, Knights of Columbus Asset Advisors LLC. Supreme Knight Carl A. Anderson recently spoke with Columbia Editor Alton J. Pelowski about the launch of the K of C Asset Advisors and how it will benefit the Order and the broader Catholic community.

Columbia: How are the Order’s life insurance products related to the mission of the Knights of Columbus?

Supreme Knight: From the very beginning, Father Michael J. McGivney conceived of a fraternal benefit society to support the Catholic community, and the Knights of Columbus has taken seriously the responsibility of securing the financial future of our members and their families. Father McGivney’s founding vision continued to be an inspiration as the Order grew and adopted a modern life insurance program.

Today, the Knights of Columbus is among the largest companies in America, as ranked on the Fortune 1000 list. For nearly 40 consecutive years, we have earned the highest rating from A.M. Best, citing our impressive financial and fraternal strength. In addition, the Order has been named a World’s Most Ethical Company® by the Ethisphere Institute — one of only two such companies in the life insurance category.

At the foundation of these achievements, there has always been an acute sense that we do not view our clients merely as customers. Rather, we recognize them as fraternal brothers, and that is a distinction that makes a great difference. Our approach puts our brother Knights and their families before profits and requires us to manage all of the associated risks accordingly.

Columbia: And the Order’s approach to investments is tied to its mission as well?

Supreme Knight: Yes, our insurance program and investment philosophy relate to the fraternal vocation of every Knight and to the paternal responsibility of the Order as a whole. By “paternal,” I do not mean “paternalistic” and the negative connotations of that term. Rather, I am referring to the authentic vocation of fathers, which is to serve and protect their families.

Pope Francis referred to this vocation in his inaugural homily on March 19, 2013, when he reflected on St. Joseph, who he said “exercises his role as protector … with an unfailing presence and utter fidelity.” Pope Francis has also spoken about the grace of fatherhood and “spiritual paternity,” which is realized in the defense of others.

Just as a father has a special vocation to protect his family, the Knights of Columbus has a special vocation to protect our members and their families, who have entrusted their future financial security to us through our insurance program or annuity program.

As a distinctly Catholic organization, the Order’s responsibility to defend and protect also goes beyond its individual members and their families. In a particular way, Knights are called to witness to the virtue of charity and to build up the Church.

Columbia: How does this Catholic identity affect the kind of things that the Order chooses to invest in?

Supreme Knight: Companies involved with funding things such as abortion, contraception, pornography, embryonic stem-cell research and human cloning are eliminated from the Knights of Columbus insurance program portfolios. There is no minimum revenue test, meaning that as little as one penny of revenue from any of those sources eliminates a company from further consideration.

Our investment team has been managing screened portfolios on behalf of the insurance program for many years, and has achieved positive financial returns for our insurance and annuity portfolios while fully adhering to Catholic teachings.

Columbia: With that having been said, what is Knights of Columbus Asset Advisors?

Supreme Knight: Knights of Columbus Asset Advisors has been established to expand the scope of the Order’s investments program. It is a wholly owned subsidiary of the Knights of Columbus that is largely comprised of our current investment staff. Up until now, our investment staff has been structured as a “captive investment firm.” In other words, our people have managed assets only for the Order, and at the same time we “outsource” very little investment decision-making to others. With K of C Asset Advisors, we will now be an SEC-registered investment advisor with the capacity to manage capital for Catholic institutions unaffiliated with the Order.

K of C Asset Advisors will be responsible for managing the insurance and annuity assets for our members, and it will also have investment products available to other institutional investors, including Catholic dioceses, hospitals, parishes and schools.

Columbia: How did this program come about? Why launch it now?

Supreme Knight: In its service to the Church, the Knights of Columbus has long included among its investments the support of capital projects in various dioceses and parishes. The first investment of this kind took place in 1896, when the Supreme Council provided a loan to St. Rose of Lima Church in Meriden, Conn. Our ChurchLoan program has approved more than $600 million of low-interest loans to Catholic churches and schools, and currently includes more than 100 active accounts.

Over the years, many Catholic institutions have also approached the Knights of Columbus about the possibility of managing their assets. In our analysis, we have found that there is a large institutional Catholic marketplace that is highly fragmented, meaning there are a large number of small providers. And one of the biggest challenges confronting Catholic institutional investors is the very small number of Catholic-screened products that they can invest in. Given the size and scale of managing the Knights of Columbus general account, we believe that K of C Asset Advisors will be in a unique position to provide a high quality service to institutions that seek security, stability and Catholic-screened investment options.

Columbia: What kinds of investment products and services will be offered?

Supreme Knight: We expect that at its launch, K of C Asset Advisors will offer both fixed-income and equity mutual funds. The strategies for these funds will be consistent with those used by the investment team on behalf of our insurance program. And very importantly, these funds will comply with Catholic moral teaching.

K of C Asset Advisors may also offer investment advisory and other services to certain customers in a separate account. Additionally, certain customers will be offered an “outsourced chief investment officer” strategy through which it will partner with Catholic institutions to develop goals and objectives and allocate assets in a manner designed to achieve those goals.

Columbia: Will these funds be available to individuals?

Supreme Knight: Initially, the mutual funds are expected to be available only to institutions. However, employees of institutional investors may have access to the funds via 401(k) and similar types of savings plans, providing a Catholic-screened option that was not previously available to them.

Columbia: Is there anything else that members of the Knights should know about Knights of Columbus Asset Advisors?

Supreme Knight: The service and dedication that insurance members have received from our dedicated field force of agents and committed investments team will be unchanged. We will continue to proudly offer products “by brother Knights, for brother Knights.”

Extending our proven, Catholic-screened investment strategies to other Catholic institutions through K of C Asset Advisors will simply be an opportunity for the Order to strengthen and support Catholic communities. In the future, I believe this will become one of the great services the Knights of Columbus can make to the financial health and sustainability of our dioceses, parishes, religious communities, schools, colleges and health care facilities. It makes sense for us to do so, since members of the Order are, first and foremost, members of the Body of Christ, and the vitality of our Church is directly related to the vitality of the Knights of Columbus.