Kempen Lux Euro Credit Fund - Class AN

Profile

Kempen International Funds SICAV - Kempen (Lux) Euro Credit Fund (the Fund) invests primarily in credits that have an investment grade rating (of minimal BBB-) and are denominated in Euros. The Fund may invest a small part in credits that are not included in the benchmark. The benchmark, the Markit iBoxx Euro Corporates Index, only includes bonds with an investment grade rating.

The Fund aims to earn a higher total long term return than the benchmark by implementing an active investment policy. In order to achieve this, a diversified portfolio is constructed and investment risks are continuously monitored. Investments are selected on the basis of extensive analysis of the terms and conditions of the bond issues.

Management team

Alain van der Heijden, Joost de Graaf, Bart aan den Toorn, Harold van Acht, Lizelle du Plessis, Kim Lubbers, Tetiana Kharlamova

Performance per 2021-03-31 (rebased)

No chart data available

Performance per 2021-03-31

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  Fund Benchmark
1 month 0.2 % 0.2 %
3 months -0.8 % -0.8 %
This year -0.8 % -0.8 %
2018 -0.8 % -1.3 %
2019 6.7 % 6.3 %
2020 3.8 % 2.7 %
1 year (on annual basis) 8.8 % 8.7 %
3 years (on annual basis) i 3.0 % 2.4 %
5 years (on annual basis) i 2.8 % 2.3 %
Since inception (on annual basis) i 5.1 % 4.1 %
On 23 July 2013, the rebate free class (AN) of Kempen (Lux) Euro Credit Fund was launched. The results shown of the period 30 January 2012 until 23 July 2013 are those of class A of the same fund. The higher management fee of Class A has had an impact on the performance quoted. On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund. Up to 30 January 2012 (start of the Fund’s A class) the performance graph and performance table show the performance of KECF. The average annual TER for the period of April 2008 till June 2013 is 0.91%. Performance is shown after deduction of ongoing charges. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

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Total fund size
EUR 1,173.98 M 2021-03-31
Share class size
EUR 33.07 M 2021-03-31
Number of shares
1,021,103 2021-03-31
Net Asset Value i
EUR 32.45 2021-04-21
Turnover rate
253.44 %
Morningstar rating â„¢
Morningstar Analyst rating
Neutral
The turnover rate figure is per the end of the financial year of the fund and will be updated once a year.

Fund characteristics per 2021-03-31

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  Fund Benchmark
Number of holdings 319 3160
Duration i 5.5 5.3
Yield to maturity 0.6 %
Weighted rating BBB+ BBB+
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Developments per 2021-03-31

In March, the spread on the iBoxx Euro Corporate Index tightened by 2 basis points to 95 basis points above the government bond curve and 68 basis points over de swap curve. The index earned an absolute return of 0.17%. German 10-year government bond yields closed March at -0.29%, representing a decrease of 3 basis points compared to the end of February.

March was not an overly volatile month for credit although the last week did produce a bit of volatility. The ECB remains vocal in its support for the bond market and its low rate strategy. This was to be expected after the relatively strong run up in the German 10 year government yield in February (+26 bps). Christine Lagarde asserted that the Governing Council ‘has exceptional tools to use at the moment, and a battery of those. We will use them as and when needed.’

At the end of the month volatility picked up a bit. This was caused by a combination of economic data, COVID news flow and the sudden blow up of family office Archegos that caused multibillion dollar losses at several banks. Spreads of Credit Suisse’s holdco bonds widened by about 15 bps in the month as a result. Despite this, Q1 2021 was an incredibly stable quarter for bank spreads. According to ABN Amro, spreads closed just 0.2 basis points wider for the quarter. The Euro-denominated bank index now stands at 56 bps over swap. Again according to ABN AMRO, this was the most stable quarter for Euro-denominated bank spreads since the index data begun in 1999!

On the economic side in Europe, European and French sentiment data improved, the March PMI data for Europe showed a final reading of 62.5 – almost 5 points higher than February, and worries about bad German employment data were unfounded. The manufacturing side of the economy keeps doing well while the services side remains impacted by various forms of COVID related lockdowns. The readings from the services PMIs are not disastrous however and show that the economy is adjusting to the new environment. This bodes well for when the vaccination rate picks up and various restrictions can be eased. Also US economic data continuous to improve.

After a strong run up in government bond yields in February, German rates softened slightly in March. US rates however continued to rise and the US 10 year government bond hit the 1.74% level and was up another 34 bps in the month. It is now back to levels last seen in February 2020 but still quite a way off from the 3%+ level seen at the end of 2018. Also the 2 – 10 year spread has widened significantly year to date. It started the year at 80 bps and now hovers around the 150 bps mark. This is positive for the profitability of US banks. In contrast to the ECB, the FED seems rather sanguine with regard to the rise in yields. They do openly express their wish to see inflation run above their target for a while and are in no rush to boost short-term interest rates to supress the taxing effect of higher inflation. The US bond market is actively pricing this in.

The pandemic continued to have an influence on markets. As per the end of the month John Hopkins reported the number of global fatalities now surpassed the 2.75 million mark. Over the month of March we saw the number of new daily cases again accelerate after a slowdown in February. This acceleration was largely caused by emerging markets like Brazil, Mexico and India and to a lesser extent by Continental Europe. This caused lock down measures to largely intensify in several European countries (France, Belgium, Italy). On the vaccine front news was mostly positive, as several studies confirmed that the vaccinations are very effective. However, it is also clear that premature relaxation of COVID related measures cause the virus to flare up in the younger part of the population that is not vaccinated yet. Also the pressure on hospital systems is only slowly receding. Full re-opening of economies is therefore probably not going to happen before the summer or even autumn.

On the fiscal side support continuous to be strong. Resulting in higher growth forecasts, mainly for the US. One of the big reasons for higher growth forecasts in the US has been the Biden stimulus package with a size of 9% of the US GDP. Hot on the heels of this 1.9 trillion $ stimulus package comes a proposal for an almost 2.3 trillion $ package with a strong focus on infrastructure investments. The plan is that this package will be funded via an increase in the corporate tax rate from 21% to 28%. It still needs to pass Congress and it remains to be seen if President Biden can keep all the Democrats on board.

The economic data coming out of the US remain strong. Unemployment continues to decline, wage growth remains healthy and confidence numbers remain in expansionary mode. The only negative came from a decline in retail sales MoM although February was revised upwards to +7.6% so this data point was largely ignored by the market. Also the US managed to again increase the pace of vaccinations. The percentage of the population having received at least one shot of the vaccine increased from slightly more than 15% of the population to slightly less than 30% of the population during the month of March. At the end of the month around 3 million shots were given per day which amounts to almost 1% of the population. In Europe, the vaccination rate also accelerated but was hampered by continued uncertainty around the safety of the AstraZeneca vaccine.

The demand for credit remains strong, and also the ECB picked up their acquisition pace after the relatively low amount they purchased in February (approximately €4 billion). In March the ECB bought a net €6.9 billion in corporate bonds under its CSPP program. This was also significantly higher than the amount that they bought in January (€4.9 billion). It is clear that the ECB reacted to counteract the run-up in government bond rates. Supply of corporate bonds in March amounted to €45 billion, with net supply at €14 billion. Sector wise TMT, Real Estate & Utilities are responsible for a big part of the year to date issuance with in total €18 billion, €19 billion and €24 billion respectively issued this year. Due to the ongoing strong demand for corporate bonds new issue premiums have been little to non-existent this year relative to this time last year (pre-crisis) when new issue premiums were strong. Many new issues have been priced through their curves. However, during the last two weeks of March this fortunately temporarily changed for a while and we could participate in several new issues that offered attractive premiums. Corporate hybrids' supply is up significantly to €15 billion year-to-date versus €6 billion last year and just €3 billion in 2019. Many corporates continue to issue hybrids to support their ratings and to refinance maturing hybrids. Financial supply amounted to €29 billion in March, which is up on March 2020 (€14 billion) and similar to February 2021 (€30 billion). Supply totals €84 billion YTD, ahead of 2020 YTD supply of €79 billion.

In March, the insurance sector was the clear stand out performance wise followed by automobiles & parts. Most insurers reported solid fourth quarter numbers which helped spreads. The only underperformers were the North American issuers. The automobile sector recovered from a weak February. The chip shortage is now a well know headwind and is probably judged to be a temporary in nature. Furthermore, the sector was helped by a rerating of Volkswagen. Its success on the electric vehicle front was picked up by US retail investors that bid up the share price. This had a positive impact on the bonds as well.

During the month, the portfolio’s sensitivity to market trends varied between 105% and 110%. The portfolio therefore held an overweight positioning in terms of market risk.

Our positioning in automobiles & parts, banks, telecommunications and utilities performed relatively well in March. Our position in infrastructure and insurance had a small negative impact on performance.

At individual company level, positive contributions came from the overweight in Volkswagen and EDF (both senior and subordinated bonds) that performed relatively well. Also the underweight in Telefonica helped as did the overweight in Telco Tower company Cellnex. Our overweight in National Grid detracted as the issuer was downgraded by one notch by Fitch and also their North American business was downgraded with one notch by S&P. Fraport bonds widened again after a strong February which subtracted a bit from performance.

In March the Fund participated in new deals from amongst others Traton, Nidec, UCB and Cadent Finance. As said before, there was a brief period when new issues provided relatively attractive new issue premiums, especially on the bank side. As a result we also participated in new senior preferred deals from UBS, BFCM, OP Corporate Bank and Banco Santander. Also on the Tier 2 side we participated in new issues from Société Générale, Barclays and Standard Chartered. Having said that, the period was brief so we have returned to our previous stand. This means that we take a conservative approach towards participating in new issues as new issue premiums are limited and valuations look increasingly stretched (especially on the long end).

Outlook
We remain mildly constructive on the market. Although we see the significant positive effect that a working vaccine will progressively have on the economy in the longer term, we do remain concerned on the near term economic growth expectations. We expect economic growth momentum to continue to be weak in the near term, but have a positive view on a 3 month horizon with a recovery expected by the end Q2. Especially for the US we have strong growth expectations. This does however increase the risk of a more restrictive monetary policy. Companies remain very much bond holder focussed. This supports the fundamental quality. However after the rally in 2020 valuations are starting to look expensive. Finally, the technical backdrop still remains very robust as a result of the ECB’s willingness and ability to provide liquidity to the government and corporate bond markets combined with limited net supply.

Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Performance per 2021-03-31 (rebased)

No chart data available

Performance per 2021-03-31

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  Fund Benchmark
1 month 0.2 % 0.2 %
3 months -0.8 % -0.8 %
This year -0.8 % -0.8 %
2018 -0.8 % -1.3 %
2019 6.7 % 6.3 %
2020 3.8 % 2.7 %
1 year (on annual basis) 8.8 % 8.7 %
3 years (on annual basis) i 3.0 % 2.4 %
5 years (on annual basis) i 2.8 % 2.3 %
Since inception (on annual basis) i 5.1 % 4.1 %
On 23 July 2013, the rebate free class (AN) of Kempen (Lux) Euro Credit Fund was launched. The results shown of the period 30 January 2012 until 23 July 2013 are those of class A of the same fund. The higher management fee of Class A has had an impact on the performance quoted. On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund. Up to 30 January 2012 (start of the Fund’s A class) the performance graph and performance table show the performance of KECF. The average annual TER for the period of April 2008 till June 2013 is 0.91%. Performance is shown after deduction of ongoing charges. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

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Distributing
No
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Maturity profile (2021-03-31)

Fund
Benchmark
30.1 %
5-7 year
21.9 %
27.6 %
3-5 year
26.8 %
15.9 %
0-3 year
24.8 %
13.8 %
7-10 year
16.6 %
12.8 %
> 10 year
10.0 %
0.1 %
Other
0.0 %
Total
100 %
100 %

Sector allocation (2021-03-31)

30.3 %
Banks
14.8 %
Consumer Goods & Services
9.8 %
Telecom & Technology
9.2 %
Industry
8.6 %
Health Care
8.5 %
Utilities
8.1 %
Financial Services & Real estate
4.2 %
Energy
3.8 %
Insurance
1.7 %
Basic Materials
1.0 %
Other
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2021-03-31)

Fund
Benchmark
0.0 %
AAA
0.3 %
4.5 %
AA
8.7 %
39.6 %
A
39.4 %
50.5 %
BBB
51.6 %
3.9 %
BB
0.0 %
1.7 %
Not Rated
0.0 %
Total
100 %
100 %
The rating allocation of the Fund is based on the Bloomberg Composite method. The rating allocation of the benchmark is based on the rating allocation used by provider Markit iBoxx.

Top 10 holdings (2021-03-31)

0.9 %
3.000% Volkswagen Fin Serv 2020-25
0.9 %
0.000% Enel 2019-24
0.9 %
1.875% General Electric 2015-27
0.8 %
0.637% Morgan Stanley 2019-24
0.8 %
3.500% Volkswagen 2020-25 PERP
0.8 %
0.250% Daimler 2019-23
0.8 %
1.125% Orange 2019-24
0.8 %
0.500% BNP Paribas 2019-25
0.8 %
0.500% Banque Fed Cred Mutuel 2018-22
0.7 %
1.875% Groupe Bruxelles Lambert 2018-25
Total
8.1 %
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.320 %
Service fee i
0.10 %
Taxe d'abonnement i
0.05 %
Expected ongoing charges i
0,47 %
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Share class details

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Share class
AN i
Investor type
Private
Distributing
No
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
No
Investment category
Credits
Universum
Credits denominated in euro
Inception date
2013-07-23
Domicile
Luxembourg
May be offered to all investors in
Belgium, Luxembourg, Switzerland, The Netherlands, United Kingdom
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
J.P. Morgan Bank Luxembourg S.A.
Morningstar rating â„¢
Morningstar Analyst rating
Neutral

Tradability

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Minimum subscription
Initial subscription €1
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU0927664200
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Kempen's vision and mission

Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

  • ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

  • Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

  • Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

  • Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.

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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance.  This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.

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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

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Our full voting records are available here.

Climate change

As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).

  • 2050 commitment: Net-zero investor.  Â
  • 2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.  Â
  • 2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.[1]

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The Kempen climate change policy can be found here (under climate change policy).

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[1]We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.

OUR FUND APPROACH TO RESPONSIBLE INVESTMENT

Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of:  Exclusion, Integration and Active ownership and impact.

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1. Exclusion

In line with the general Kempen policy, the Kempen Euro Credit Strategies[2] exclude all companies on the KCM exclusion- or avoidance list. Companies on these lists are either involved in the production of controversial weapons, they derive a significant portion of their revenues from the production or distribution of tobacco, or have been involved in serious controversies. In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change.

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2. ESG Integration

Responsible Investment in the Kempen Euro Credit Strategies is not limited to the exclusion of companies. Rather, ESG criteria are an integral part of the investment process. To form a fundamental opinion on a company, the portfolio managers assess the business profile, the financial profile and the ESG profile. Research provided by MSCI ESG Research LLC is used as a basis for the ESG assessment.  Â

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A low score on ESG criteria can result in the demand for an additional premium on the company’s bonds and/or initiation of an engagement with the issuer. If ESG risks are deemed too severe, an investment in the company will be avoided and/or existing holdings will be sold.

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On a quarterly basis, the Kempen Responsible Investment team screens the holdings of the Kempen Euro Credit Strategies, and discusses the findings with the portfolio managers. Special attention is paid to companies scoring an MSCI ESG rating of B or lower, those with a ‘fail’ marked against the criteria of the UN Global Compact or those companies that attract a red flag on the MSCI ESG impact monitor. Companies in carbon intensive sectors are also given special attention. We prefer to invest in companies that integrate climate risks and opportunities into their organisation, and are able to move towards a low- carbon economy.

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3. Active Ownership

For our Kempen Euro Credit Strategies, we distinguish between three types of engagement. They are i) an engagement for awareness, ii) an engagement for change, and iii) a public policy and/or systemic engagement. Engagement for awareness is aimed at raising awareness on certain issues with a company and/or collecting more information on a specific ESG issue. Engagement for change, which could follow an engagement for awareness, has the goal of achieving a specific SMART goal. The third form of engagement relates to seeking an improvement in a public policy or a system relevant to wider capital markets

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Our engagement process defines four milestones:

1. Raise concern with the company;

2. Company acknowledges the issue;

3. Company sets out a strategy / agrees to improve;

4. Company implements the strategy. Â

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Our engagement could start at any of the first three milestones. When a milestone is reached, a document of proof is attached to the engagement case and the engagement will move on to the following milestone. When the fourth milestone is reached, the engagement is closed, but we continue to monitor the company. If at any stage the company refuses to cooperate, divestment has to be considered. To measure willingness to cooperate, we set specific timelines for the engagement. With regard to climate change, we engage generally and take a sector-specific approach for the most carbon-intensive companies and sectors (oil and gas, utilities), as these count for the largest part of the global carbon emissions.

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The Kempen Euro Credit Strategies, began an engagement with Bayer in 2018, following their acquisition of Monsanto. Through the acquisition, Bayer inherited several significant controversies in the field of genetically modified organisms (GMOs). The goal of our engagement is to get a formal and written statement from the company which states that they will not sue small holder farmers for the unintended use of Bayer licensed GMO crops. It also asks the company to set a target for the number of farmers that receive education on their crop protection products.

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In addition we have ongoing engagement cases with Volkswagen on its company culture, Cez on the use of thermal coal (you can find the engagement factsheet here). We do this direct and collaborative via the Climate Action 100+ engagement initiative.

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4. Impact

With regard to climate change we prefer:

  • Green bonds over non-green bonds if the risk-returns are similar. We have (as stated in the 2025 objectives) a green bond target on a ‘comply or explain’ basis (e.g. it must fit with the investment strategy). Targets need to be relevant, although the investment strategy characteristics need to be taken into account.
  • Sustainable (-Linked) / SDG-Linked bonds over non-sustainable / SDG-Linked bonds if the risks-returns are similar. Note that as with green bonds, there are criteria for these bonds and these will be assessed on a case-by-case basis.

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[2] The Kempen (Lux) Euro Credit Fund, Kempen (Lux) Euro Credit Fund Plus, Kempen (Lux) Euro Sustainable Credit Fund and Kempen (Lux) Euro High Yield Fund

Risks

For more information about the mid and long term risks associated with the investments:

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Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
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disclaimer zin EN
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.