Fund Description and Objective:
The KL Allocation Fund seeks long-term capital appreciation with an emphasis on capital preservation.
The fund invests in the equities of Knowledge Leaders, those companies that possess deep reservoirs of intangible capital as a result of their history of investing in knowledge-intensive activities like R&D, brand development and employee education. Academic research has proven highly innovative companies have a tendency to generate excess returns in the stock market, and it is these excess returns the investment team aims to capture in the portfolio.
The fund employs an allocation strategy, investing in three asset classes depending on market factors: equities, fixed income and cash. As a result of highly active stock selection and asset allocation decisions, the fund has established a long history of avoiding major market drawdowns. May be recommended for portfolio performance, portfolio efficiency and downside protection.

Key Facts

Inception Date:
Morningstar Category:
I-share/Advisor share:
I-share CUSIP:
Advisor share CUSIP:
Total Operating Expenses:
Distribution Frequency:
Benchmark:

Portfolio Manager:
9/30/2010
Tactical Allocation
GAVIX/GAVAX
461418659
461418667
1.28%/1.53%
Annually
Morningstar Developed Markets
Large-Mid Cap Index
Steven Vannelli, CFA

Performance
(as of 11/30/2022)

As of 9/30/2022, the 1-year, 5-year, 10-year and since inception annualized total returns for the KL Allocation Fund Advisor Class were -18.09%, -0.32%, 3.57% and 4.60% and Institutional Class were -17.81%, -0.06%, 3.84% and 4.89%, respectively. The Morningstar Developed Markets Large-Mid Cap Index 1-year, 5-year, 10-year and since inception annualized total returns as of 9/30/2022 were -20.30%, 4.99%, 8.01% and 7.97%. Based on the Fund’s current prospectus, the total annual operating expenses of the Fund are 1.53% and 1.28% for the Advisor and Institutional Classes, respectively. The inception date for the KL Allocation Fund is 09/30/10.

Past performance is no guarantee of future results. Ratings may reflect fee waivers in effect; in their absence, ratings may have been lower. Ratings for other share classes may vary. As of 9.30.22, the KL Allocation Fund was rated by Morningstar for risk-adjusted performance against the following numbers of U.S.-domiciled Tactical Allocation funds over the following time periods: 234 funds in the last three years, 203 funds in the last five years and 234 funds overall. With respect to these Tactical Allocation funds, the KL Allocation Fund (GAVIX/GAVAX) received Morningstar Rating of 2 stars for the three-year, five-year and overall periods, respectively. Please note: Morningstar ratings reflect the 3- and 5-year time periods but will not reflect greater time periods in the Tactical Allocation category before the fund’s strategy added a secondary objective of capital preservation and fixed income allocation. The Morningstar ratings highlighted here reflect the time period since that update.

Moneyball Investing: Winning the Loser’s Game
Oakland A’s Coach Billy Beane’s genius was transforming professional baseball from a Winner’s Game, in which the actions of a few superstars dictated the outcome, to a Loser’s Game, where the team that made the fewest errors won. Legendary investor Charles Ellis has declared that active money management also has turned from a Winner’s Game to a Loser’s Game. Today, when over 90% of active managers are underperforming*, success may be as much about selling the wrong stocks as buying the right ones. In the KL Allocation Fund, we apply a Moneyball approach: seeking to outperform by making fewer mistakes than the overall market.

 

We first published “Moneyball Investing, Winning the Loser’s Game” in January 2018, and it quickly became our most popular white paper ever. The COVID-19 crisis of 2020 and its impacts on the markets remind us that years of accumulated investor capital can disappear in the blink of an eye. As such, we revisited our Moneyball analysis to explore how the philosophy stands up to new data. Download our updated white paper here: Moneyball Investing: Winning the Loser’s Game.


Risk Metrics
(as of 9/30/2022 - Trailing 10 Years)

Risk Metrics
GAVIX
Morningstar DM Large-Mid Cap Index
Return
3.84
8.01
Beta
0.41
1.00
Alpha
0.11
0.00
Correlation
0.69
1.00
Overall Capture Ratio
0.97
1.00
Standard Deviation
9.02
15.31
Sharpe Ratio
0.38
0.54
Treynor Ratio
7.67
7.30
Sortino Ratio
0.59
0.79

Past performance does not guarantee future results.

Diversification Analysis
(as of 9/30/2022)

The KL Allocation Fund (GAVIX) had a lower correlation to the Morningstar DM Large-Mid Cap Index than the Morningstar Tactical Allocation category average over the trailing 10-year period.

Allocations
(as of 9/30/2022)

Asset Allocations

Asset
Percent
Equity
48.94
Cash & Equivalents
28.49
Fixed Income
22.57

Equity Allocations by Sector

Sector
Percent
Health Care
29.49
Information Technology
21.24
Industrials
13.48
Consumer Staples
12.98
Communication Services
8.36
Consumer Discretionary
7.78
Financials
5.19
Utilities
1.46

Equity Allocations by Country

Asset
Percent
United States
72.67
Japan
7.06
Denmark
4.10
Singapore
3.53
United Kingdom
2.54
Canada
2.51
France
2.17
Argentina
2.10
Sweden
1.79
Switzerland
1.53

Top 25 Equity Holdings
(as of 9/30/2022)

Top 25 Equity Holdings
ASPEN TECHNOLOGY INC
1.73
LHC GROUP INC
1.48
PINTEREST INC
1.48
IONIS PHARMA INC
1.48
ELI LILLY & CO COM
1.45
BROADCOM INC COM
1.44
MERIDIAN BIOSCIENCE INC
1.41
YAKULT HONSHA CO LTD
1.35
GALLAGHER ARTHUR J & CO.
1.35
MASIMO CORP
1.34
AMDOCS LIMITED
1.32
CARLISLE COS INC
1.31
PAYCHEX INC
1.28
NOVO NORDISK A/S-B
1.27
WW GRAINGER INC COM
1.26
ASTRAZENECA PLC
1.24
TOROMONT INDS LTD
1.23
MERCK & CO INC COM
1.06
BIOMERIEUX
1.06
MERCADOLIBRE INC
1.03
HENRY JACK & ASSOC INC
1.01
ETSY INC
1.01
PTC INC
0.97
SPOTIFY TECHNOLOGY SA
0.88
VERTEX PHARMACEUTICALS INC.
0.82

What is the Knowledge Effect?

The Knowledge Effect is the tendency of highly innovative companies to generate excess returns in the stock market. It is a market anomaly based on decades of academic research. To learn more, read our white paper, The Knowledge Effect: Excess Returns of Highly Innovative Companies.

See Definitions, Terms & Conditions

Please consider the Fund’s investment objectives, risks, charges and expenses before investing. The prospectus or summary prospectus that contains this and other information about the Fund, is available by calling 888.998.9890 and should be read carefully.

The value of the securities held by the Fund will change due to general market and economic conditions and industry perceptions. Investments in non-US issuers may involve unique risks. Currency fluctuation, adverse political, economic or social developments could undermine the value of the Fund’s investments. The securities of mid-cap companies may be subject to more abrupt or erratic market movements and may have lower trading volumes. Many of the risks with respect to foreign investments are more pronounced for investments in issuers in developing or emerging market countries. An investment in a fund that is less diversified across countries or geographic regions is generally riskier than an investment in a more geographically diversified fund.

Portfolio composition will change due to ongoing management of the Fund. References to specific securities or sectors should not be construed as recommendations by the Fund, its Advisor or Distributor.

The Fund’s primary performance benchmark is the Morningstar Developed Markets Large-Mid Cap Index. The index is a subset of large-cap and mid-cap stocks in the Morningstar Developed Markets Index, a broad market Index representing 97% of Developed Markets equity market capitalization.

The Fund’s secondary benchmark is the Morningstar US Treasury Bond Index, which measures the performance of fixed-rate, investment-grade USD-denominated Treasury bonds with maturities greater than one year. It is market-capitalization weighted.

Market Turbulence Resulting from COVID-19. The outbreak of COVID-19 has negatively affected the worldwide economy, individual countries, individual companies and the market in general. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks that apply to the Fund.

The KL Allocation Fund is distributed by IMST Distributors, LLC.

© 2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Morningstar RatingTM
The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Knowledge Leaders Funds are not sponsored, endorsed, sold or promoted by Morningstar, Inc. or any of its affiliates (all such entities, collectively, “Morningstar Entities”). The Morningstar Entities make no representation or warranty, express or implied, to the owners of the Knowledge Leaders Funds or any member of the public regarding the advisability of investing in mutual funds or ETFs generally or in the Knowledge Leaders Funds in particular or the ability of the Knowledge Leaders Funds to track mutual fund or ETF market performance. THE MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE KNOWLEDGE LEADERS FUNDS OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS OMISSIONS, OR INTERRUPTIONS THEREIN.

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KL Allocation Fund
Global Balanced Strategy

 

Knowledge Leaders
Developed World ETF

Global Equity Strategy

 

Managed Accounts
Global Balanced & Equity Strategies

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