Kempen Lux Euro Credit Fund - Class IX


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 2022-08-31 (rebased)

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Performance per 2022-08-31

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  Fund Benchmark
1 month -4.2 % -4.2 %
3 months -3.1 % -3.3 %
This year -7.0 % -7.2 %
Since inception (on annual basis) i -7.0 % -7.2 %
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 898.16 M 2022-08-31
Share class size
EUR 109.41 M 2022-08-31
Number of shares
117,625 2022-08-31
Net Asset Value i
EUR 906.51 2022-10-03

Fund characteristics per 2022-08-31

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  Fund Benchmark
Number of holdings 371 3449
Duration i 4.9 4.8
Yield to maturity 3.4 %

Developments per 2022-08-31

In August, the spread of the iBoxx Euro Corporates Index widened by 8 basis points to a level of 115 basis points over the swap curve. This is equivalent to approximately 214 basis points over the government bond curve. The index earned a total return of -4.24%. German 10-year government bond yields closed August at +1.54%, representing an increase of 72 basis points compared to the end of July 2022.

Credit markets carried over July’s strength in the first weeks of August. Inflows in the asset class combined with a dearth of new supply put downward pressure on spreads; they bottomed out around 97 bps mid-August. At that point new issue activity restarted. Before the summer period, some issuers were still hopeful that inflation would subside and that interest rates would decline. That hope obviously disappeared and issuers decided to place new bonds earlier than usual in August. To get bonds placed, new issue premiums needed to be attractive and several times topped 20 bps. This again repriced secondary curves wider and pushed up overall spread levels.

The summer market rally eased financial conditions while central banks need these to remain tight to cool the economy. In contrast, inflation figures remained far too high although the first signs of stabilization were recorded on the back of lower commodity prices. Central bankers around the world stepped up their anti-inflation rhetoric to keep financial conditions tight. This also affected risk sentiment. Government bond rates bottomed out earlier in August than credit spreads and then started to gradually increase. The 10 year German government increased by 72 basis points, French OATs by 77 bps and Italian BTPs by 87 bps.

Most of the economic data published last month, such as the global composite Purchasing Managers’ Index (PMI), which dropped to a 22-month low of 50.8 in July, continued to illustrate the slowing of the global economy. However, the economic data was generally a bit better than expected, as shown by economic surprise indices. All in all, the level of uncertainty about the outlook for the global economy remains elevated. This uncertainty is especially elevated in Europe, where after six months of war in Ukraine there is no sign of a ceasefire, and where a recession seems increasingly likely this winter as the region’s energy crisis continues to intensify. While the resumption of Ukraine’s grain exports through the port of Odessa has eased global food price pressures somewhat, Russia has continued at the same time to limit its gas exports to Europe, which together with the announcement of an unscheduled maintenance shutdown of the Nord Stream 1 pipeline, pushed average gas prices over the month to new all-time highs.

In the US, even though the economy has already recorded two consecutive quarters of negative economic growth this year, some economic data published in August was quite positive. US employment data was surprisingly strong, with the non-farm payrolls print showing that 528k jobs were created in July compared to market expectations of only 250k. The details of the report were also positive as it showed that hiring had picked up significantly across sectors while the unemployment rate fell, and wages rose. At the same time, inflation seems to have passed its peak as CPI increased 8.5% year on year in July, down from 9.1% in June. However, core inflation is still above the Federal Reserve’s (the Fed’s) target. The Fed remains committed to curbing inflation, as evidenced by the rather hawkish speech that Jerome Powell gave at Jackson Hole at the end of the month.

Eurozone second-quarter GDP surprised on the upside, growing 0.7% QoQ, but the data revealed important divergences among member states. Those countries benefiting from the post-Covid services rebound, such as Spain, Italy and, to a lesser extent, France, generally performed well while the German economy, which is the most dependent on Russian gas imports, came to a standstill. Still, recession risks remain elevated, as shown by the weakness of the euro, which dropped to parity with the US dollar, and by the Flash Eurozone composite PMI, which dropped further into contraction territory at 49.2 in August.

We continue to run an underweight risk position from a beta perspective. During the month we kept our beta positioning largely unchanged. Wider spreads and increasing dispersion continue to present interesting relative value opportunities. One of the most remarkable trades we executed in August involved Nidec 0.046% 2026. At the end of July we sold our holdings at a z-spread of 20.5 bps as it was trading tight compared to similar rated names. Then mid-August the bond suddenly started to weaken without any news to justify this. We bought small increments up to a z-spread of 171 bps. Just as suddenly the bond started to strengthen again but we continued buying. In the morning of 24 August we bought the last clip at a z-spread of 127 bps. Then the spread really collapsed and we sold the first clip six hours later at a z-spread of 41.5 bps. In cash terms this was a 3% higher price. An very strong return in a very short timeframe on an A3 rated bond.

Issuance in August amounted to €38.7bn on a gross basis, which was one of the highest amounts for August ever. The split between Financials and Non-Financials was €23.9 bn and €14.8 bn respectively. Net supply was positive at €21.7 bn. New issuance premia (NIP) remain high, averaging 20bps. The issuance outlook is clouded at the moment. Corporate supply is clearly running behind the average levels of the past few years while Financial supply is largely inline. It seems that corporates are willing and apparently able for now to ‘wait it out’ in the hope that financing costs will decline again when inflation is ‘conquered’. With inflation likely to remain sticky, we expect that corporates will have to bite the bullet and proceed with new issuance over the coming quarters .

Demand for IG credit continued in August although it did peter out at the end of the month. According to JP Morgan, cumulative weekly inflows for August aggregated to €1.2bn (~1.1% of AUM). The inflows were largely concentrated in ETFs.

The portfolio delivered a return of -4.12% (gross). This was 12 basis points above the benchmark return of -4.24%. During the month, the portfolio’s sensitivity to market trends varied between 97% and 100% in beta terms. The portfolio is still underweight spread duration, mainly at the longer end of the credit spectrum where credit curves remain flat. The portfolio remains invested in defensive off benchmark segments such as covered bonds, agencies and supranationals. The portfolio continues to have a large underweight in BBBs, a reflection of tight valuations at an issuer level given the uncertainty surrounding the market and economy.

With spreads wider over the month our exposure to defensive off benchmark segments (in covered bonds, agencies, supranationals and cash) contributed positively to performance. Our positioning in automobiles & parts, oil & gas and food & beverage had a positive contribution, while insurance and utilities contributed negatively this month. On an individual issuer level the strategy saw a positive contribution from our overweights in Eni, Fraport and Volkswagen. Our overweights in Cadent Finance and Royal Bank of Canada and our underweight in Generali contributed negatively.

In August, the Fund participated in new deals from Saint Gobain, SegroPLP, Eurogrid, RWE, British Telecom, EON, Volvo, Siemens, GBL and Prologis European Logistics amongst others. On the financials side, we participated in Helaba, ING Group, Nordea, KBC, Credit Agricole, Swiss Life, NN Group, BNP Paribas, Svenska Handelsbanken, Deutsche Bank, Nationwide, NatWest Group and Allianz amongst others.

Although credit spreads have widened a bit again, we remain on the cautious side. We see more risks on the horizon, including a prolonged Russian invasion, uncertainty regarding European energy supply and security, weaker global growth and stubbornly high inflation. We are still moderately bearish and think spreads could widen due to the weaker macro-economic environment, expectations for aggressive hiking by central banks and impact over time of Quantitative Tightening globally. Q2 2022 company results were solid but we fear that higher rates and a potential recession in both Europe and the US over the next 18 months are not adequately reflected in earnings and profit guidance at present. Spreads are too low to fully compensate for the risks that we have identified. The technical backdrop is not supportive with supply that needs to pay substantial NIPs to be able to print. We expect spreads between rating categories to decompress. We are strongly underweight the BBB segment as a result. Lastly we are also underweight the long end of the credit curve due to the expected impact of rising rates on longer dated maturities.

Performance per 2022-08-31 (rebased)

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Performance per 2022-08-31

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  Fund Benchmark
1 month -4.2 % -4.2 %
3 months -3.1 % -3.3 %
This year -7.0 % -7.2 %
Since inception (on annual basis) i -7.0 % -7.2 %
Performance is shown after deduction of ongoing charges. The value of your investments may fluctuate. Past performance provides no guarantee for the future.


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Maturity profile (2022-08-31)

29.2 %
5-7 year
18.7 %
27.5 %
3-5 year
28.7 %
19.6 %
0-3 year
28.8 %
12.7 %
7-10 year
15.8 %
10.3 %
> 10 year
8.0 %
0.8 %
0.0 %
0.1 %
0.0 %
100 %
100 %

Sector allocation (2022-08-31)

33.8 %
14.1 %
Consumer Goods & Services
10.4 %
Financial Services & Real estate
8.8 %
8.1 %
Telecom & Technology
7.5 %
6.5 %
Health Care
4.9 %
3.6 %
1.0 %
0.7 %
0.4 %
Basic Materials
0.3 %
Sovereign bonds
100 %
The cash position is included in ‘Other’.

Rating allocation (2022-08-31)

7.7 %
0.3 %
3.1 %
8.6 %
36.6 %
40.4 %
47.6 %
50.7 %
2.9 %
0.0 %
1.4 %
Not Rated
0.0 %
0.8 %
0.0 %
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 (2022-08-31)

1.3 %
1.875% Volkswagen Bank 2019-24
1.1 %
0.050% Sparebank 1 Boligkredit 2021-28
0.9 %
2.500% Volkswagen Bank 2019-26
0.9 %
1.000% Cheung Kong Infra 2017-24
0.8 %
1.500% CTE CO de Transport Elec 2017-28
0.8 %
0.000% Novartis 2020-28
0.8 %
0.625% KFW 2017-27
0.8 %
2.125% Credit Suisse 2022-26
0.8 %
1.125% European Union 2016-36
0.8 %
1.375% Danske Bank 2022-27
9.1 %

Environmental and/or social characteristics promoted

The Kempen Euro Credit Fund, Kempen Euro Credit Fund Plus and Kempen Euro High Yield Fund (the “Funds”) fall under the scope of article 8 of the SFDR which means that the Funds promote environmental and/or social characteristics. This Funds will invest in a broad range of companies, of which some will have sustainability objectives.

The Fund commits to the goals of the Paris Agreement. This encompasses short-term objectives (2025), a mid-term ambition (2030) and a long-term commitment to be a net zero investor by 2050. By 2025, we aim to be aligned with a path to achieving the Paris Agreement and Dutch Klimaatakkoord. We follow the market reduction, which assumes a pathway in line with the EU Benchmarks.

Fund carbon emission targets

ESG Investment process

The promotion of environmental and/or social characteristics is achieved through the consistent implementation of the Funds ESG policy. The ESG policy is fully implemented in our strategy’s investment process across the three relevant pillars of: Exclusion, ESG integration and Active ownership.

In the investment process we assess the ESG profile of a company. We look at each company on a case-by-case basis, taking into account material risks in a given industry in combination with the company’s respective risk exposure, practices and disclosure. This includes an assessment of good governance practices. The investee companies are rated for governance aspects using external research as well as making internal assessments. Furthermore, we look into the company’s exposure to past controversies and future ESG opportunities. Based on the fundamental ESG analysis we form an opinion on the quality of a company’s ESG profile.


The Fund applies exclusion criteria. These take into account international standards, such as UN Global Compact Framework, the OECD Guidelines for Multinational Enterprises, UN Guiding Principles for Business and Human Rights, and our Principles for Responsible Investment commitments. The Funds apply additional exclusion criteria based on product involvement and business conduct.

Key figures

  Kempen criteria Additional criteria
Business conduct
Human Rights
Anti Corruption
Product involvement
Controversial Weapons
Thermal Coal
Tar Sands
Adult Entertainment
Animal Welfare & GMO
Power Generation Nuclear
Power Generation Carbon Intensive
(Un)conventional Oil & Gas Extraction



An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.290 %
Service fee i
0.10 %
Taxe d'abonnement i
0.01 %
Expected ongoing charges i

Other costs

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Upward swing factor i
0.25 %
Downward swing factor i
0.25 %

Share class details

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Share class
Investor type
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
Investment category
Credits denominated in euro
Inception date
May be offered to professional investors only in
Belgium, Luxembourg, The Netherlands
UCITS status i
Open-end i
Base currency
Share class currency
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A., Luxembourg branch


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Minimum subscription
Initial subscription: €50,000 additional subscriptions: €10,000.
This share class of the Fund may only be acquired by institutional investors who are client of the Management Company and who meet the minimum holding requirement or other qualification requirements established from time to time by the Management Company.