Kempen Lux Euro Credit Fund Plus - Class I

Profile

Kempen International Funds SICAV - Kempen (Lux) Euro Credit Fund Plus (the Fund) invests primarily in credits that have an investment grade rating (of minimal BBB-) and mostly 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. This is realized by also using non-investment grade bonds. In addition, instruments such as asset backed securities, credit default swaps and loans listed in other currencies can be used. In the process there will be explicitly looked at efficient use of these instruments and with particular attention to managing investment risks of the portfolio as a whole. A diversified portfolio is constructed and investment risks are continuously monitored. Investments are selected on the basis of extensive analysis of the terms and conditions of the bond issues.

Management team

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

Performance per 2021-05-31 (rebased)

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Performance per 2021-05-31

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  Fund Benchmark
1 month -0.2 % -0.2 %
3 months -0.0 % 0.0 %
This year -1.0 % -0.9 %
2018 -0.9 % -1.3 %
2019 7.0 % 6.3 %
2020 4.1 % 2.7 %
1 year (on annual basis) 4.7 % 4.4 %
3 years (on annual basis) i 3.2 % 2.4 %
5 years (on annual basis) i 2.7 % 2.1 %
Since inception (on annual basis) i 3.5 % 2.8 %
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 277.43 M 2021-05-31
Share class size
EUR 129.23 M 2021-05-31
Number of shares
99,740 2021-05-31
Net Asset Value i
EUR 1,299.75 2021-06-21
Turnover rate
199.47 %
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 2021-05-31

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  Fund Benchmark
Number of holdings 322 3194
Duration i 5.4 5.3
Yield to maturity 0.5 %
Weighted rating A- BBB+
Kempen (Lux) Euro Credit Fund Plus (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 2021-05-31

In May, the iBoxx Euro Corporates index widened by 4 basis points to a level of 68 basis points over the swap curve. This is equivalent to 98 basis points over the government bond curve. The index earned a total return of -0.17%. German 10-year government bond yields closed May at -0.19%, representing an increase of 1 basis point compared to the end of April.

Volatility picked up a bit in May driven by more signs that inflation is accelerating in the United States. CSPP eligible curves and shorter-dated bonds (<8 years) remained well supported throughout the month. The non-CSPP long-end saw selling pressure during the last week of April that continued into the first weeks of May. At the end of May the inflation fears started to fade and the long end of the curve started to tighten again.

The increase in European bond yields initially continued in May, with spreads on bunds, OATs and BTPs increasing by 10, 14 and 21 basis points, respectively by mid-May. This is on the back of continued positive momentum in sentiment data, vaccination rates and the US CPI ex food and energy hitting the 3% level for the first time since January 1996! Inflation data from the eurozone also showed an uptick, with consumer prices increasing by 2% in May, the highest level in more than two years, and the Core CPI coming in at 0.9% in May vs. 0.7% in April. Soothing words from the world’s Central Bankers and a slight weakening in US economic data at the end of the month, caused spreads to tighten again to end the month almost unchanged.

The ECB left the Eurozone’s headline interest rate unchanged at 0% in May, in line with expectations. The ECB for now also doesn’t seem likely to decelerate the PEPP buying programme although some council members are hinting at this possibility. We expect these hints to slowly become less subtle on the increasing success of the EU’s vaccination drive. The ECB official PEPP website states the following: “The Governing Council will terminate net asset purchases under the PEPP once it judges that the COVID-19 crisis phase is over, but in any case not before the end of March 2022.”

In the US, yields on 10 year US Treasuries tightened three basis points to 1.60% after initially widening by roughly 5 bps. This was despite continued strong economic data. The US Fed’s expectation that the current strong inflation upturn will prove to be temporary apparently is enough for many market participants not to worry too much about the current readings.

Although economic data remained strong in the US during May, there were a number of readings that disappointed. The unemployment rate surprisingly increased to 6.1% from 6% the month before. Also manufacturing data weakened although it remains in expansionary mode. The ISM manufacturing index declined from 64.7 to 60.7. Also retail sales came in weaker than expected. All in all market participants brushed the unemployment data off as just a blip in the overall strong and improving trend.

The Fed reiterated its continuing support for the US economy, despite upgrading its view of the recovery. Interest rates are kept close to zero and debt purchases will be maintained at $120 billion per month. In relation to inflation, Jay Powell stated that “If we see inflation moving materially above 2% in a persistent way that risks inflation expectations drifting up, then we will use our tools to guide inflation and expectations back down.”

The pandemic’s influence on developed markets waned further during May. At the end of May John Hopkins reported the number of global fatalities in excess of 3.6 million. Also around the end of the month, the amount of vaccine doses administered globally broke the 2 billion level. The US continues to increase the pace of vaccinations. The percentage of the population having received at least one shot increased from approximately 40% of the population to more than 50% of the population during the month of May. Also in April this percentage climbed by 10 percentage points. 40% of the US population is now fully vaccinated. In Europe, confirmed cases are also decreasing, with the vaccination rate gaining positive momentum. As a case in point, over half of the Kempen European Credit Team members will have received their first shot by the middle of June! The European Commission proposed easing restrictions on travel for those who have been fully vaccinated against COVID-19. The situation in many Emerging markets remains precarious although also here the worst seems to be behind us. New infections in India peaked around the 5th of May at above 400k but ended the month around 150k per day. Also India has administered over 200 million first vaccine doses.

At the end of May, Biden’s budget plan for fiscal year 2022 was released. It includes his two signature domestic proposals, the American Families Plan and the American Jobs Plan. The topline budget request for 2022 is $6 trillion. According to the NY Times, this plan that still has to be approved by Congress, would push federal spending to its highest sustained level since World War II. It would also result in deficits running above $1.3 trillion per year throughout the next decade. It is safe to say that the US government will keep stimulating the domestic economy.

In the credit market, the focus returned to primary, as May is traditionally an active month in this regard. The demand for credit remains strong. The ECB continues to increase the pace of purchases, with €80.7 billion bought under the PEPP in May, almost equal to the €80.1 billion in April and 30% higher than the average purchases from January to March. The ECB’s CSPP buying totalled €5.4 billion in May, roughly in line with the average amount bought per month YTD. The ECB now owns over €300 billion in corporate bonds.

Supply of corporate bonds in May amounted to €35 billion, with net supply at €18 billion. Sector wise Real Estate, Industrials & Chemicals and Utilities are dominating the year to date issuance with in total €28 billion, €27 billion and €33 billion, respectively, issued this year. From a net supply perspective it is again the Real Estate sector that has taken the lead with almost €16 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 (pre-crisis) 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 €22 billion year-to-date versus €6 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 €26 billion in May, which is higher than May 2020 (€15 billion). In May we have seen a pickup in LT2 and AT1 issuance by banks despite already healthy solvency levels. Overall supply totals €162 billion YTD, behind 2020 crisis-fuelled YTD supply of €242 billion but ahead of 2019’s YTD supply of €156 billion.

In May, travel & leisure and retail were the outperforming sectors. Both sectors profited from good news on the COVID front caused by an acceleration of the vaccination rate in Europe. Plummeting infection rates allowed governments to relax lock down rules and further reopen economies. As both sectors were heavily impacted by these measures, spreads tightened nicely.

During the month, the portfolio’s sensitivity to market trends varied between 102% and 110%. The portfolio therefore held an overweight positioning in terms of market risk.

Our positioning in real estate, infrastructure, banks and utilities performed relatively well in May. Our positioning in telecommunications and insurance had a small negative impact on performance.

At individual company level, positive contributions came from our overweight in Fraport and UBS Group. Also, our underweight in Unibail-Rodamco contributed to outperformance, with spreads widening after it placed new bonds for which it had to pay a clear concession. Negative contributions came from our underweight in APA Group and our position in Merlin that we sold during the month.

In May the Fund participated in new deals from amongst others Danone, Metlife, Ericsson, Unibail , Volkswagen and Tennet. On the banks side, we participated in Credit Mutuel, Credit Suisse and Bank of America. We continue to take a conservative approach towards participating in new issues as new issue premiums are limited and all in valuations are stretched. May is always a heavy new issuance month so despite participating in quite a few new placements, we passed on many others.

Outlook
We remain fairly 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 released to date are beating already high expectations. We are however seeing initial signs of shareholder friendly behaviour, with a handful of 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. All in all we have decided to slightly reduce our beta overweight position given these circumstances.

Kempen (Lux) Euro Credit Fund Plus (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 2021-05-31 (rebased)

No chart data available

Performance per 2021-05-31

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  Fund Benchmark
1 month -0.2 % -0.2 %
3 months -0.0 % 0.0 %
This year -1.0 % -0.9 %
2018 -0.9 % -1.3 %
2019 7.0 % 6.3 %
2020 4.1 % 2.7 %
1 year (on annual basis) 4.7 % 4.4 %
3 years (on annual basis) i 3.2 % 2.4 %
5 years (on annual basis) i 2.7 % 2.1 %
Since inception (on annual basis) i 3.5 % 2.8 %
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 Plus (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 (2021-05-31)

Fund
Benchmark
30.0 %
5-7 year
21.7 %
25.8 %
3-5 year
26.5 %
14.9 %
0-3 year
25.2 %
14.6 %
7-10 year
16.4 %
10.9 %
> 10 year
10.3 %
3.8 %
Cash
0.0 %
Total
100 %
100 %

Sector allocation (2021-05-31)

29.5 %
Banks
13.4 %
Consumer Goods & Services
10.5 %
Telecom & Technology
8.6 %
Financial Services & Real estate
8.4 %
Health Care
8.3 %
Utilities
7.8 %
Industry
4.4 %
Other
4.0 %
Energy
3.7 %
Insurance
1.5 %
Basic Materials
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2021-05-31)

Fund
Benchmark
4.5 %
AA
8.5 %
42.0 %
A
38.3 %
43.9 %
BBB
52.9 %
4.4 %
BB
0.0 %
1.6 %
Not Rated
0.0 %
3.8 %
Cash
0.0 %
0.0 %
AAA
0.3 %
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 (2021-05-31)

0.9 %
0.000% Enel 2019-24
0.8 %
0.000% Novartis 2020-28
0.8 %
0.010% UBS 2021-26
0.8 %
3.000% Volkswagen Fin Serv 2020-25
0.7 %
0.250% Daimler 2019-23
0.7 %
1.875% General Electric 2015-27
0.7 %
0.010% NTT Finance 2021-25
0.7 %
1.000% Cheung Kong Infra 2017-24
0.7 %
0.375% Medtronic Global 2019-23
0.7 %
0.250% Telenor 2020-28
Total
7.6 %
Kempen (Lux) Euro Credit Fund Plus (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
0.420 %
Service fee i
0.10 %
Taxe d'abonnement i
0.01 %
Expected ongoing charges i
0,53 %
Kempen (Lux) Euro Credit Fund Plus (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
I i
Investor type
Institutional
Distributing
No
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
No
Investment category
Credits
Universum
Credits
Inception date
2013-12-10
Domicile
Luxembourg
May be offered to professional investors only in
Belgium, France, Germany, Italy, Luxembourg, Sweden, Switzerland, The Netherlands, United Kingdom
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
J.P. Morgan Bank Luxembourg S.A.
Morningstar rating â„¢
Morningstar Analyst rating
Neutral

Tradability

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Minimum subscription
Initial subscription: €50,000, additional subscriptions: €10,000
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU0986645306
Kempen (Lux) Euro Credit Fund Plus (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 Plus (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 Plus (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.