Market Overview

A New Super Factor, The Investment Case for Knowledge

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Special report details the new market anomaly that rises above value,
size, quality, low volatility and momentum factors

Knowledge Leaders Capital today released a special report for investors
entitled "A
New Super Factor: The Investment Case for Knowledge
," detailing the
results of the first market test of the Knowledge Effect, the tendency
of highly innovative companies to deliver excess returns in the stock
market.

Findings*

  • The first market test of the Knowledge Effect now has three years of
    live performance and 18+ years of indexing results;
  • Cumulative index returns surpassed the benchmark MSCI World Index by
    262.5% as of 6/30/18;
  • Knowledge as a factor delivered consistently superior returns compared
    to five widely followed factors: value, size, quality, low volatility
    and momentum in our analysis; and
  • Fama-French testing reveals the Knowledge Effect as represented in our
    index also led the five traditional factors in generating alpha, a
    measure of excess returns against the benchmark.

In addition, the white paper details academic research behind the Knowledge
Effect
over the last two decades and demonstrates how the Knowledge
Leaders Developed World Index
captured the market anomaly in an
index. Additional charts include a factor performance history over 18
years, relative returns considering yearly hit rate, alpha analysis of
investment factors, and multi-factor sensitivities of the Knowledge
Effect.

The report can be downloaded here: A
New Super Factor: The Investment Case for Knowledge
.

About Knowledge Leaders Capital

Knowledge Leaders Capital identified the Knowledge
Effect
and created the first investment methodology designed to
capture the excess returns of highly innovative companies. Knowledge
Leaders Capital is creator and designer of the Knowledge Leaders
Strategy, indexes and investment products. Learn more at Knowledge
Leaders Capital
or email info@klcapital.com.

###

*An investor cannot invest directly in an index. Index performance is
not indicative of actual trading or guarantee of future results. Live
data began for the Knowledge Leaders Developed World Index on its launch
date of 7/1/2014, and the base date of the index calculation is
3/31/2000. Returns of the index prior to the launch date were calculated
by applying the rules systematically to historical financial statements
for each company in the index retroactively, as of the launch date. Such
historical results are not based on an index that was maintained in real
time. See index and historical index return disclosures.

Disclosures

An investor cannot invest directly in an index. Any reference to index
performance does not represent the performance of any investment product
offered by Knowledge Leaders Capital, LLC. Index performance does not
represent actual trading or the impact of material economic or market
factors. The performance of a client account may vary from the index
performance. Index returns shown are not reflective of actual investor
performance nor do they reflect fees and expenses applicable to
investing. The pre-inception performance results prior to the launch
date of the index are hypothetical returns which have been compiled by
Knowledge Leaders Capital. The index data is the property of Knowledge
Leaders Capital, which has contracted with Solactive AG (to calculate
and maintain the indexes).

The launch date of the Knowledge Leaders Developed World Index
(Bloomberg ticker KNLGX) is 7/1/2014 and the base date of the index
calculation is 3/31/2000. The returns of the index prior to the launch
date are based on applying the rules in effect as of the launch date
retroactively to historical periods to and including the base date. Such
historical results are not based on an index that was maintained in real
time. To obtain additional index methodology and constituent components,
please visit
www.knowledgeleaderscapital.com.

The information contained herein is provided for informational purposes
only and should not be regarded as an offer to sell or a solicitation of
an offer to buy the securities or products mentioned. The material
contains the opinions of the manager and such opinions are subject to
change without notice. The strategies discussed in the presentation may
not be suitable for all investors. KL Capital makes no representation
that the contents are appropriate for use in all locations, or that the
transactions, securities, products, instruments, or services discussed
are available or appropriate.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

The Knowledge Leaders Developed World Index is an equal-weighted
index that tracks highly innovative companies and consists of mid– and
large-cap companies from the developed world. The Knowledge Effect is
the tendency of highly innovative companies to generate excess returns
in the stock market. Knowledge Leaders are highly innovative companies.
Knowledge Leaders 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. We identify
Knowledge Leaders by measuring a company's investment in its future
growth. Based on decades of academic research, our proprietary model
adjusts a company's financial history to capitalize these investments
and reveal the companies with the greatest knowledge intensity.

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