Kempen Lux Euro Credit Fund - Class B

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, Arif Bagasrawalla

Performance per 2021-10-31 (rebased)

No chart data available

Performance per 2021-10-31

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  Fund Benchmark
1 month -0.8 % -0.7 %
3 months -2.0 % -1.8 %
This year -1.5 % -1.1 %
2018 -1.1 % -1.3 %
2019 6.3 % 6.3 %
2020 3.5 % 2.7 %
1 year (on annual basis) -0.3 % 0.0 %
3 years (on annual basis) i 2.6 % 2.4 %
5 years (on annual basis) i 1.7 % 1.7 %
Since inception (on annual basis) i 4.6 % 3.9 %
On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund (the Fund). Up to January 2012 (start of the Fund class A) the performance graph and performance table show the performance of KECF. The results shown of the period January 2012 until June 2013 are those of class A of the Fund. The average annual TER for the period of April 2008 till June 2013 is 0.92%. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. 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 985.90 M 2021-10-31
Share class size
EUR 4.25 M 2021-10-31
Number of shares
79,442 2021-10-31
Net Asset Value i
EUR 53.67 2021-11-26
Turnover rate
253.44 %
Morningstar rating â„¢
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 2021-10-31

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  Fund Benchmark
Number of holdings 331 3305
Duration i 5.5 5.3
Yield to maturity 0.6 %
Weighted rating A- 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 60, avenue J.F. Kennedy, L-1855, 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 2021-10-31

In October, the iBoxx Euro Corporates Index tightened by 1 basis points to a level of 53 basis points over the swap curve. This is equivalent to 87 basis points over the government bond curve. The index earned a total return of -0.73%. German 10-year government bond yields closed October at -0.11%, representing an increase of 9 basis points compared to the end of September.

Inflation was again the number one point of debate during October. A number of larger central banks (Bank of Canada and the Bank of England) came out with hawkish statements regarding their monetary policy. Almost every dovish central bank had to acknowledge that inflation was less transitionary then initially expected. Even the ECB had to admit to this. To be fair to the ECB, there are indeed a number of factors pushing up Eurozone inflation that are unlikely to last. It is difficult to see energy prices (driving 50% of inflation in September according to ECB President Lagarde) having a similar inflationary impact going forward. Also the German VAT hike will stop contributing to inflation from January onwards. A big question mark however remains how long the supply chain disruptions will continue to impact the global economy and to what extent this contribute to inflation. More importantly, inflation expectations are clearly on the rise as well. Especially in the US this seems to be impacting wage demand. US average hourly earnings rose by 4.6% YoY.

Economic data remained strong in Europe and the US, with both the Euro Area Composite PMI at 56.2 and the US PMI at 55 at very healthy levels. The US unemployment rate declined further to 4.8%. Economic activity in China seems to lag both the US and Eurozone with the non-manufacturing PMI stabilizing in the mid 52 area while the manufacturing PMI declined slightly further to 49.2, indicating a very mild contraction of activity in the manufacturing sector. There are more and more signs that the global economy is impacted by supply shortages in several sectors which is holding back economic activity. It might also cause inflation to remain elevated for a longer period than initially expected.

October inflation data remained at elevated levels. US CPI of 5.4% and core CPI at 4.0%, both stayed close to recent highs (5.4% and 4.5%, respectively). Europe’s estimated CPI for October saw the year-on-year increase at 4.1%, compared to a September reading of 3.4%.

As a result, European bond yields continued to widen in October, with spreads on bunds, OATs and BTPs widening by 9, 14 and 31 basis points, respectively. Yields on 10 year US Treasuries increased by 6 basis points to 1.55%. The Fed minutes continue to indicate a desire to raise rates in the second half of 2022.

Global COVID-19 infections continued to rise in October now that summer season has ended in the Northern Hemisphere. The pandemic however held little sway over markets during October. More and more countries are opening up again for foreign travel. After Australia now also New Zealand abandoned the zero COVID strategy realizing that this is not a long term strategy.

In credit, primary markets were active in October. At €46.8 billion gross, activity was however clearly lower than in September due to black-out periods related to earnings releases. Also rate volatility might have deterred a bit of issuance activity. The split between financials and corporates was €25.2 billion / €21.6 billion. Issuance across CoCo/LT2/Corp hybrids in October was €0.0/2.8/0.6 billion compared to €2.1/1.5/10.2 billion in October last year. Net supply amounted to €18.5 billion. Most issuance priced close to our assessment of FV, with new issue premiums remaining limited but in several instances the premiums reached double digit levels this month.

The demand for credit remained solid in October but was weaker than in September. The picture of strong inflows in the previous months did not continue in October, with a small €262 million outflow in EUR IG. Most of this took place in the second week of October and the outflows were ETF driven and centered on the longer durations. The weekly flow from JPM ending 27 Oct was an inflow of €136 million (0.1% of AUM). CSPP purchases in October remained steady and in line with September (€5.5 billion). An announcement on the (further tapering of the) PEPP is planned in December. The PEPP purchases were lower with € 68 billion purchased in October compared to slightly more than € 80 billion on average in the May – July period. This was also less than in September (€ 76 billion).

In October, Real Estate and Construction & Materials were the underperforming sectors. The Real Estate sector was impacted by rate volatility and the concerns around the Adler Group, which negatively impacted the whole sector. Health Care was the best performing sector, benefitting from the defensive nature of its end markets.

The portfolio delivered a return of -0.68% (gross). This was 4 basis points above the benchmark return of -0.73%. During the month, the portfolio’s sensitivity to market trends varied between 100% and 106%. The portfolio therefore held an overweight positioning in terms of market risk. Our positioning in Real Estate, Media and Automobiles & Parts performed relatively well in October. Our positioning in Infrastructure, Food & Beverage and Telecommunications had a negative impact on performance. At individual company level, positive contributions came from our overweight in Atlantia and Thermo Fisher while our underweight in Unibail also contributed positively. Negative contributions came from amongst others our overweight in DAA Finance and Heineken.

In October, the Fund participated in new deals from amongst others Engie, CK Hutch, Howoge, Toyota and Wesfarmers amongst others. On the financials side, we participated in UBS, Nordea, SEB and Swedbank amongst others. We continue to take a conservative approach towards participating in new issues as new issue premiums are limited and all in valuations are stretched.

Outlook
We remain mildly constructive on the market. US and European economic data remains strong but growth rates are slowing. Companies’ Q3 2021 results released to date are supportive, with many companies revising guidance upwards. However we are currently seeing increasing signs of shareholder friendly behaviour, with more companies increasing dividends, launching substantial share buyback programmes or showing appetite for M&A. With spreads at all-time lows, valuations are looking really expensive. The technical backdrop continues to remain supportive for now with the ECB continuing to actively buy corporate bonds and emphasising that actual tapering of assets purchased will be done in a very gradual manner.

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 60, avenue J.F. Kennedy, L-1855, 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 2021-10-31 (rebased)

No chart data available

Performance per 2021-10-31

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  Fund Benchmark
1 month -0.8 % -0.7 %
3 months -2.0 % -1.8 %
This year -1.5 % -1.1 %
2018 -1.1 % -1.3 %
2019 6.3 % 6.3 %
2020 3.5 % 2.7 %
1 year (on annual basis) -0.3 % 0.0 %
3 years (on annual basis) i 2.6 % 2.4 %
5 years (on annual basis) i 1.7 % 1.7 %
Since inception (on annual basis) i 4.6 % 3.9 %
On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund (the Fund). Up to January 2012 (start of the Fund class A) the performance graph and performance table show the performance of KECF. The results shown of the period January 2012 until June 2013 are those of class A of the Fund. The average annual TER for the period of April 2008 till June 2013 is 0.92%. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

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Distributing
Yes
Last dividend
EUR 0.33
Ex-date last dividend
2021-07-16
Number of distributions per year
2
Dividend calendar
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 60, avenue J.F. Kennedy, L-1855, 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 (2021-10-31)

Fund
Benchmark
29.8 %
5-7 year
20.8 %
23.9 %
3-5 year
27.0 %
16.7 %
0-3 year
25.5 %
14.8 %
7-10 year
16.2 %
12.4 %
> 10 year
10.5 %
2.5 %
Cash
0.0 %
0.1 %
Other
0.0 %
Total
100 %
100 %

Sector allocation (2021-10-31)

29.5 %
Banks
15.3 %
Consumer Goods & Services
9.9 %
Telecom & Technology
9.9 %
Financial Services & Real estate
8.5 %
Utilities
8.0 %
Health Care
6.7 %
Industry
4.1 %
Energy
4.1 %
Insurance
2.6 %
Other
1.0 %
Basic Materials
0.4 %
Sovereign bonds
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2021-10-31)

Fund
Benchmark
1.9 %
AAA
0.3 %
6.9 %
AA
8.1 %
41.2 %
A
39.2 %
41.2 %
BBB
52.5 %
4.0 %
BB
0.0 %
2.3 %
Not Rated
0.0 %
2.5 %
Cash
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 (2021-10-31)

1.5 %
0.625% KFW 2017-27
1.4 %
3.375% Volkswagen 2020-28
1.3 %
0.625% BPCE 2020-25
1.2 %
0.250% Daimler 2019-23
1.2 %
0.000% Novartis 2020-28
1.1 %
2.125% BNP Paribas 2019-27
1.0 %
0.375% Volkswagen 2021-26
1.0 %
3.000% Volkswagen Fin Serv 2020-25
0.9 %
0.125% Toyota Motor Credit Corp 2021-27
0.8 %
1.125% Orange 2019-24
Total
11.3 %
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 60, avenue J.F. Kennedy, L-1855, 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
0.640 %
Service fee i
0.10 %
Taxe d'abonnement i
0.05 %
Expected ongoing charges i
0,79 %
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 60, avenue J.F. Kennedy, L-1855, 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
B i
Investor type
Private
Distributing
Yes
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
No
Investment category
Credits
Universum
Credits denominated in euro
Inception date
2013-06-20
Domicile
Luxembourg
May be offered to all investors in
Belgium, France, Luxembourg, Switzerland, The Netherlands, United Kingdom
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Administrator
BNP Paribas Securities Services S.C.A., Luxembourg branch
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A., Luxembourg branch
Morningstar rating â„¢

Tradability

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Minimum subscription
Initial subscription €1
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU0630255189
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 60, avenue J.F. Kennedy, L-1855, 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 60, avenue J.F. Kennedy, L-1855, 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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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 60, avenue J.F. Kennedy, L-1855, 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.