Kempen European Sustainable Value Creation Fund NV

Profile

Kempen European Sustainable Value Creation Fund (KESVCF) is primarily created for long-term investors and offers the opportunity to invest in a diversified portfolio of European publicly traded shares of companies open to stakeholders and environmental, social and governance criteria in their strategy. KESVCF aims to select investments focusing on long-term and sustainable growth.

Investments in the fund are screened by an independent data provider to assess compliance with environmental, social and governance (ESG) criteria. The Fund will only invest in companies with an ESG rating of at least BB or a similar rating.

Management team

Richard Klijnstra, Mark Oud, Martijn Kleinbussink

Performance per 2020-02-29 (rebased)

No chart data available

Performance per 2020-02-29

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  Fund Benchmark
1 month -7.1 % -8.5 %
3 months -6.9 % -7.8 %
This year -7.4 % -9.6 %
2017 1.4 % 0.9 %
2018 -10.5 % -10.6 %
2019 29.9 % 26.0 %
1 year (on annual basis) 9.2 % 3.0 %
Since inception (on annual basis) i 3.9 % 1.2 %
Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The performance figures shown in the graph are rebased. 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 234.37 M 2020-02-29
Share class size
EUR 234.37 M 2020-02-29
Number of shares
2,236,183 2020-02-29
Net Asset Value i
EUR 91.68 2020-03-27
Transaction price i
EUR 89.93 2020-03-26

Fund characteristics per 2020-02-29

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  Fund Benchmark
Number of holdings 31 438
Dividend yield i 2.85 % 3.82 %
Weighted average market capitalization i EUR 53,286 M EUR 66,845 M
P/E ratio i 16.59 13.55
Active share i 84.30 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Portfolio developments per 2020-02-29

In February, the fund earned a return of -7.08% versus a return on the MSCI Europe Index of -8.47%. The financial and healthcare sectors made the largest contributions to the performance, while consumer discretionary made the largest negative contribution. The relative performance was chiefly driven by the selection effect.

Markets decided in February that they could no longer ignore the COVID-19 outbreak. According to Bill Gates1 there are two reasons for the threat posed by COVID-19: it can be fatal to healthy people as well as the elderly and it is transmitted from person to person fairly efficiently. This creates huge uncertainty about the impact of COVID-19.

The market has already started to price in potentially lower economic growth and corporate earnings. However, it is reasonable to assume that the virus will not affect all companies in the same way. An airline, for example, will face greater disruption from the virus than Kerry Group, a manufacturer of food ingredients.

Moreover, not all corporate earnings are generated in the same way. Some earnings will be deferred, while others will be lost forever. Temporary disruption to the production and sales of EssilorLuxottica lenses and glasses will probably be caught up on later. A lost tourism season can never be recouped.

The greater part of a company’s intrinsic value is based on cashflows of three or more years into the future. Although the impact of COVID-19 could well be painful in the short term, a decrease in the intrinsic value of a well-positioned company is unlikely. If the price of a company does fall, this could yield a unique opportunity to buy into it. And that’s what we’ve done.

Rational is a global market and technology leader in innovative solutions for thermal food preparation and holds a market share of about 50%. A major factor in its success is its customer focus. Its primary goal is to offer as many benefits as possible to those who prepare hot food in professional kitchens around the world.

Investment in a Rational product results in savings on raw materials, fats, energy, water and preparation time. A kitchen therefore recoups the investment after only five months. Furthermore, the burden on the environment is considerably lower thanks to the savings offered by a Rational product. This incorporation of sustainability into the business model is precisely what we earmark as sustainable value creation.


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What kind of companies do we seek?
We seek profitable companies undergoing structural growth that will create shareholder value in the long term alongside a clear social mandate.

The best results are achieved if the interests of all the stakeholders are aligned. This requires not only products and services but also operations to be in line with the wishes and requirements of society (licence to operate).

Moreover, the companies need to have sufficient opportunities for growth to be able to invest at an attractive return (innovation and expansion).

In order to sustain earnings growth over the long term, companies need to enjoy sustainable competitive advantages compared to existing and new competitors (strong strategic position).

The role of management
We expect management to pursue a long-term strategy in addition to conducting sound day-to-day management. The risks and opportunities relating to ESG need to be clearly incorporated, backed up by sensible investment plans that respond to long-term trends and match the company’s strategic positioning and growth opportunities.

Quality and valuation
We believe the selected companies are above-average quality in terms of strategy and operations and are capable of creating long-term value for all stakeholders. Depending on the absolute valuation of their equities, they could form an interesting addition to the portfolio.
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2020-02-29 (rebased)

No chart data available

Performance per 2020-02-29

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  Fund Benchmark
1 month -7.1 % -8.5 %
3 months -6.9 % -7.8 %
This year -7.4 % -9.6 %
2017 1.4 % 0.9 %
2018 -10.5 % -10.6 %
2019 29.9 % 26.0 %
1 year (on annual basis) 9.2 % 3.0 %
Since inception (on annual basis) i 3.9 % 1.2 %
Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that hasbeen paid out. The performance figures shown in the graph are rebased. 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 2.36
Ex-date last dividend
2020-02-13
Number of distributions per year
1
Dividend calendar
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Top 5 contribution (2020-02-29)

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  Contribution i Performance i
Svenska Handelsbanken 0.05 % 2.97 %
Lloyds TSB -0.00 % -0.45 %
Kerry -0.03 % -0.29 %
Novozymes -0.04 % -1.09 %
Beazley -0.06 % -1.89 %

Bottom 5 contribution (2020-02-29)

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  Contribution i Performance i
Coats -0.63 % -23.34 %
Kion -0.46 % -14.88 %
Valeo -0.40 % -15.33 %
Mowi -0.39 % -10.44 %
Vodafone Group -0.39 % -12.05 %

Geographic allocation (2020-02-29)

17.8 %
Netherlands
17.0 %
United Kingdom
15.1 %
Germany
12.0 %
France
8.7 %
Switzerland
7.2 %
Denmark
5.6 %
Sweden
4.2 %
Ireland
4.0 %
Norway
2.1 %
Spain
4.1 %
Other
2.2 %
Cash
Total
100 %

Top 10 holdings (2020-02-29)

4.8 %
Roche Holding
4.6 %
Assa Abloy
4.2 %
Kerry
4.1 %
SAP
4.1 %
Ferguson
4.1 %
ASML
4.0 %
Mowi
3.9 %
EssilorLuxottica
3.8 %
Lonza
3.8 %
Novozymes
Total
41.5 %

Sector allocation (2020-02-29)

22.9 %
Health Care
11.6 %
Technology
11.4 %
Industrial Goods & Services
11.3 %
Insurance
7.5 %
Food & Beverage
7.1 %
Chemicals
5.5 %
Automobiles & Parts
4.4 %
Personal & Household Goods
4.2 %
Retail
4.1 %
Construction & Materials
3.9 %
Basic Resources
3.0 %
Telecommunications
1.0 %
Banks
2.2 %
Other
Total
100 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Ongoing charges

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Management fee i
0.50 %
Service fee i
0.10 %
Expected ongoing charges i
0.60 %
Ongoing charges last financial year i
0.60 %
The Ongoing Charges Figure of the last financial year relates to 2018/2019.

Other costs

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Upward swing factor i
0.35 %
Downward swing factor i
0.15 %
As of 1 January 2018 the swing factor has been adjusted from 0.30%/0.10% naar 0.35%/0.15%.
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Share class details

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Share class
N
Investor type
Institutional & Private
Distributing
Yes
Benchmark i
MSCI Europe Net Total Return Index
Investment category
Sustainable Value Creation
Universum
European equities
Inception date
2017-11-13
Domicile
The Netherlands
May be offered to all investors in
The Netherlands
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Administrator
BNP Paribas Securities Services S.C.A.
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A.

Tradability

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Listed
yes, listed on the NAV Trading Facility of Euronext
Subscription/Redemption Frequency
Daily
ISIN i
NL0012512958
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Kempen's vision & 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.

Our fund approach to responsible investment

Sustainability is at the heart of the Kempen Global Sustainable Value Creation Fund and thus Kempen’s ESG policy is fully implemented in our fund’s investment process. The figure 'ESG integration in the invesment proces' offers a step-by-step illustration of this implementation in our fund’s investment process.

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Our belief is that there is an ongoing transition to a more sustainable economy, and that this generates both risks and opportunities. By investing in sustainable companies, and engaging on ESG-topics, we achieve impact and attractive financial returns. Our ESG framework evaluates exposure to potential sustainable growth drivers and the ability of a company to take advantage of these drivers based on business model, incentives, innovation capacity and strategy. Contribution to the Sustainable Development Goals is also used to measure the impact and exposure of a company.

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1. Exclusion

The fund ranks around 160 sub-industries to find those showing supportive characteristics for sustainable growth. Exposure to the Sustainable Development Goals and ESG risks are taken into account in this step. Risks affecting an entire industry (e.g. regulatory changes, market price shocks, unfair competition) will lower the overall score of the industry, making it less attractive.

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We have a hard exclusion of certain activities based on sustainability. Amongst others these include fossil fuels, weapons, tobacco, nuclear energy, adult entertainment, gambling and GMO.

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2. ESG integration

Once inappropriate industries have been screened from our investment universe, our ‘scan on quality’ process selects specific companies based on sustainable growth opportunities and attractive returns on capital. At this step, a positive selection of companies with an ESG rating of BB and higher takes place. The hurdle of BB is chosen to remain flexible in our investment universe and to be able to select companies with ESG improvement potential. As shown in the figure 'ESG Ratings', dated for 2018, the majority of our holdings tend to rate ‘A’ or above.

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A fundamental analysis of the selected companies follows this step. The fundamental analysis consists of a Company Score model and a Valuation Model. The Company Score model assesses the quality of the business and translates it into a weighted average cost of capital (WACC) as input for the Valuation Model. ESG is the second largest individual component of the total company score. The Valuation Model measures our expected future value creation and incorporates revenue growth based on ESG opportunities.

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In the final step the portfolio is formed, with a weighting based on quality, valuation and liquidity

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3. Active ownership

The Fund aims to have a continuous dialogue with all companies in its portfolio to understand the company very well, improve shareholder returns and drive the sustainability of the company.

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Exercising our voting rights is an essential part of our responsible investment philosophy. ISS provides us with voting recommendations based on our own voting and governance policy. Items are further analysed on a case by case basis.Â

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Kempen’s ESG Team monitors our portfolios and may propose engagement with low ESG performers. In a quarterly challenging session the companies in our portfolios are discussed and an action list is created based on the outcomes of this meeting.Â

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In 2018 we engaged on issues such as: remuneration, environmental targets, sustainability of the value chain, privacy and data security, money laundering, bribery and ESG integration. One result was that a company publicly disclosed their animal testing policy, and another was a company agreeing to publish their first corporate responsible report in 2019.Â

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4. Impact

In the first instance, the fund creates positive impact by allocating capital to the companies helping deliver the transition to a more sustainable economy. Our approach results in a bias to ESG leaders and a higher exposure to the Sustainable Development Goals. Management is incentivized this way to improve their ESG profile as they know they will be rewarded in the financial markets as a sustainable company with access and a lower cost of capital.Â

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Secondly, impact is achieved by acting as an active owner and working with the company to improve strategy and operations around specific ESG issues. We expect management of a company to strike a balance between the interests of the different stakeholders. Value creation is more than financial returns. Employment growth, culture, diversity, resource efficiency, carbon emissions, R&D and customer satisfaction are also important outcomes.Â

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As a hard target for our impact, the Fund’s Carbon Intensity aims to be at least 50% lower than its investible universe. As shown in the figure 'Carbon footprint' this was a target we comfortably achieved in 2018. We also aim for 50% of the companies have a direct contribution to the SDGs with their products and services.

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You can find the engagement factsheet of NN Group here.

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Risks

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.

ESG Report
Screening MSCI ESG research
Screening MSCI ESG research
UN global impact
ESG integration in the investment process
ESG integration in the investment process
Bron EN
disclaimer
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Sustainable Value Creation Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.