Kempen Lux Euro Credit Fund - Class AND

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. The objective of de duration hegded share class AND is to hedge the interest rate exposure of the portfolio and by that reduce the impact of changes in the German Sovereign Curve on the return of the share class.

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 2021-06-30 (rebased)

No chart data available

Performance per 2021-06-30

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  Fund
1 month 0.2 %
3 months 0.4 %
This year 0.3 %
2018 -3.0 %
2019 4.7 %
2020 1.9 %
1 year (on annual basis) 4.1 %
3 years (on annual basis) i 1.9 %
5 years (on annual basis) i 1.3 %
Since inception (on annual basis) i 1.5 %
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 1,033.23 M 2021-06-30
Share class size
EUR 9.25 M 2021-06-30
Number of shares
324,851 2021-06-30
Net Asset Value i
EUR 28.48 2021-07-27
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 2021-06-30

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  Fund Benchmark
Number of holdings 322 3225
Duration i 0.1 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 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 2021-06-30

In June, the iBoxx Euro Corporates index tightened by 5 basis points to a level of 63 basis points over the swap curve. This is equivalent to 83 basis points over the government bond curve. The index earned a total return of +0.43%. German 10-year government bond yields closed June at -0.21%, representing an decrease of 2 basis point compared to the end of May.

June was a relatively quiet month for credit markets. Even quarter end did not produce a meaningful pick up in volatility. Summer started early it seems. However, underneath the calm facade a lot happened during the month. Especially the increase in COVID infections due to the spread of the delta variant started to impact parts of the market at the end of the month. Also there are growing concerns about the recovery in the second half, but this has in turn reduced fears of an imminent withdrawal of monetary stimulus. Furthermore, the inflation debate is continuing but so far the market seems to believe the FEDs line that current high inflation rates are transitory and will come down later in the year.

All these sometimes contradictory views on the future kept spread volatility in the credit space relatively limited to approximately 5 bps from the high to the low. Bund yields on the other hand, initially declined by almost 9 bps to -0.27% after increasing again to -0.16% for a high to low volatility of over 10 bps. The rate closed the month at -0.21%, 2 bps lower than at the start of the month.

Economic data throughout the month remained strong in the US and Europe while they are weakening in Emerging Markets. Several developments are causing the slowing visible in Emerging Markets. First of all China is actively tightening financial conditions with the aim to increase economic stability. Also the lock down relaxations implemented in Europe and North America are causing a consumption shift from products to services which is not helping export depended economies.

The ECB left the Eurozone’s headline interest rate unchanged at 0% in June, in line with expectations. Also the PEPP buying pace was kept at a similar pace. Among council members it is clear that the discussion around the PEPP is increasing, with amongst others the president of the Dutch Central Bank repeating that the PEPP will for certain stop in March 2022. Also the ECB is sounding a bit more optimistic that its inflation targets will be reached in the not too distant future. May Eurozone core CPI was revised upwards to 1% from 0.9% earlier. Still some way of from the target but given that May saw only a limited amount of COVID relaxations the reading was encouraging.

US inflation data came in higher than expected increasing by 5% YoY in May (CPI). Also the less volatile CPI ex food and energy came in higher than expected at 3.8%. However this did not have an impact on interest rates as the market for now seems to believe in the transitory nature of the inflation data.

Other economic data from the US showed an economy that is registering healthy growth but also that the peak of the growth increase has passed. Most sentiment indicators are still coming in at healthy levels but lower than in the March – April period.

In the US, yields on 10 year US Treasuries declined almost 13 basis points to 1.47%. This move puzzled many market observers as above mentioned inflation readings were higher than expected. Various explanations were posted. The US Treasury’s decision to run down its FED general account which helped technicals in the government bond market seems to have been a factor that at least explains part of the move. Other than that the market is buying into the FED assertion that the run-up in inflation is transitory and will come down later in the year. This leaves relatively limited room for error in our opinion.

After hopeful figures and developments with regard to COVID infections in May, June initially continued in this trend. The delta variant however started to impact the data more and more later in the month and reality dawned that the virus is not done with us yet despite continued strong progress on the vaccination front.

At the end of June John Hopkins reported the number of global fatalities in excess of 3.9 million. Also around the end of the month, the amount of vaccine doses administered globally broke the 3 billion level, up from 2 billion the month before. In the US however, the vaccination pace slowed. The percentage of the population having received at least one shot increased from 50% of the population to 55% of the population during the month of June. In April and May this percentage climbed by 10 percentage points each in comparison. 47% of the US population is now fully vaccinated. In Europe, several countries are closing in on the US with regard to the level of vaccinations. According to data from Deutsche Bank, Belgium, The Netherlands, Spain, Portugal, Germany, Italy and Finland had a higher percentage of the population with at least one jab than the US at the start of July.

In the last week of June, an infrastructure deal was reached by President Biden and a bipartisan group of Senators. The bill includes approximately 579 billion US$ in new spending, and along with the renewal of existing funding the total spend will amount to 1.2 trillion over the next 8 years. The bill addresses a number of key areas in the Biden “American Jobs Plan”; namely greener public transportation, clean water, universal broadband etc. The current bill has no tax increases, but is instead financed by more stringent tax collection policies from the IRS and other measures increasing the likelihood that it will be passed in both houses of Congress.

In the credit market, the focus was mainly on primary, as the summer lull started early this year. The demand for credit remains strong however. The ECB continues to increase the pace of purchases, with €80.2 billion bought under the PEPP in June, in line with the €80 billion plus average in April and May and 30% higher than the average purchases from January to March. The ECB’s CSPP buying totalled €5.2 billion in June, roughly in line with the average amount bought per month YTD. The ECB now owns over €310 billion in corporate bonds.

Supply of corporate bonds in June amounted to €35.9 billion, with net supply at €17.5 billion. Sector wise Real Estate, Industrials & Chemicals and Utilities are dominating the year to date issuance with in total €37 billion, €30 billion and €43 billion, respectively, issued this year. From a net supply perspective it is again the Real Estate sector that has taken the lead with almost €25 billion YTD. Due to the ongoing strong demand for corporate bonds new issue premiums continue to be small to non-existent this year relative to this time last year when new issue premiums were strong. Many new issues have been priced on top of or even through their existing curves. Corporate hybrids' supply is up significantly to €24 billion year-to-date versus €17 billion last year. Many corporates continue to issue hybrids to support their ratings and to refinance maturing hybrids, profiting from the low rate and spread environment. Financial supply amounted to €22.5 billion in June, which is lower than June 2020 (€27.9 billion). Net supply at €59.4 billion YTD is higher than expected and points to clear front loading of issuance plans by banks so far this year. However due to strong deposit inflow and TLTRO money, issuance is only clearly net positive in subordinated paper and non-preferred senior paper. Senior preferred and covered bonds are experiencing relatively strong negative supply.
Overall corporate net supply totals €76.1 billion YTD and overall financials net supply totals €59.4 billion YTD. Of the corporate net supply, close to half has been absorbed by the ECB.

In June, health care and personal & household goods were the outperforming sectors. Relatively defensive sectors with on average longer duration bonds than the overall market.

During the month, the portfolio’s sensitivity to market trends varied between 102% and 108%. The portfolio therefore held an overweight positioning in terms of market risk. We did manage the beta back to the +3 to +4% area at the end of the month.

Our positioning in telecommunications, food & beverage and utilities performed relatively well in June. Our positioning in banks, technology and real estate had a small negative impact on performance.

At individual company level, positive contributions came from our overweight in Verizon Communications, Cellnex Telecom and BP. Also, our underweight in Vonovia contributed to outperformance, with spreads widening in anticipation of new supply to finance the Deutsche Wohnen acquisition. We also profited from the new issue premium offered on the new bonds. Negative contributions came from our overweight in Fraport and our underweight in Deutsche Bank.

In June the Fund participated in new deals from amongst others Nestlé, Vonovia, Gewobag, Bevlux, JD Peets and Repsol. On the banks side, we participated in De Volksbank, SEB, NatWest, Julius Baer and a lower tier two from Bayerische Landesbank. We continue to take a conservative approach towards participating in new issues as new issue premiums are limited and all in valuations are stretched. June is always a heavy new issuance month so despite participating in quite a few new placements, we passed on many others.

Outlook
We remain somewhat constructive on the market. Economic forecasts for the US and Europe have been revised upwards after recent data releases indicate that both regions had shown more resilience than expected. The market is however extremely sensitive to a potential overheating of the US economy, which may lead to a more restrictive monetary policy. Companies’ Q1 2021 results were very strong and so far expectations are high for Q2. We are also seeing initial signs of shareholder friendly behaviour, with quite a few companies increasing dividends or launching substantial share buyback programmes. With further tightening in spreads, valuations are looking expensive. The technical backdrop continues to remain robust with the ECB recently stepping up the pace of bond purchases and net supply remaining at a low level. It is however unlikely that the technical backdrop will improve further and more likely that the next Central Bank move will be to tighten conditions. All in all we have decided to slightly reduce our beta overweight position given these circumstances.

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 2021-06-30 (rebased)

No chart data available

Performance per 2021-06-30

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  Fund
1 month 0.2 %
3 months 0.4 %
This year 0.3 %
2018 -3.0 %
2019 4.7 %
2020 1.9 %
1 year (on annual basis) 4.1 %
3 years (on annual basis) i 1.9 %
5 years (on annual basis) i 1.3 %
Since inception (on annual basis) i 1.5 %
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 (2021-06-30)

Fund
Benchmark
29.9 %
5-7 year
21.2 %
25.7 %
3-5 year
26.6 %
16.9 %
7-10 year
16.5 %
15.9 %
0-3 year
25.3 %
10.0 %
> 10 year
10.4 %
1.5 %
Cash
0.0 %
0.1 %
Other
0.0 %
Total
100 %
100 %

Sector allocation (2021-06-30)

29.7 %
Banks
13.7 %
Consumer Goods & Services
10.5 %
Telecom & Technology
8.9 %
Health Care
8.7 %
Utilities
8.6 %
Financial Services & Real estate
8.0 %
Industry
4.1 %
Energy
4.0 %
Insurance
2.5 %
Other
1.6 %
Basic Materials
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2021-06-30)

Fund
Benchmark
0.0 %
AAA
0.3 %
5.8 %
AA
8.6 %
41.0 %
A
38.0 %
46.1 %
BBB
53.1 %
4.0 %
BB
0.0 %
1.6 %
Not Rated
0.0 %
1.5 %
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 (2021-06-30)

1.3 %
2.125% BNP Paribas 2019-27
1.0 %
0.583% Bank of America 2021-28
0.9 %
0.250% Daimler 2019-23
0.9 %
0.500% Thermo Fisher Scientific 2019-28
0.9 %
3.000% Volkswagen Fin Serv 2020-25
0.8 %
1.125% Orange 2019-24
0.8 %
0.010% UBS 2021-26
0.8 %
2.500% Danaher 2020-30
0.7 %
0.375% Medtronic Global 2019-23
0.7 %
1.000% Cheung Kong Infra 2017-24
Total
9.0 %
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
AND 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
2013-11-26
Domicile
Luxembourg
May be offered to all investors in
Luxembourg, Switzerland, The Netherlands
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
LU0927664465
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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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.