- Kempen
- Kempen Lux Euro High Yield Fund Class I
Kempen Lux Euro High Yield Fund Class I
Profile
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 while investment risks are continuously monitored. Investments are selected on the basis of an extensive analysis of the terms and conditions of the bond issues.
Management team
Performance per 2021-01-31 (rebased)
Performance per 2021-01-31
Fund | Benchmark | |
---|---|---|
1 month | 0.3 % | 0.3 % |
3 months | 4.4 % | 4.1 % |
This year | 0.3 % | 0.3 % |
2018 | -2.5 % | -2.9 % |
2019 | 10.8 % | 10.1 % |
2020 | 3.9 % | 1.9 % |
1 year (on annual basis) | 4.2 % | 2.4 % |
3 years (on annual basis) i | 4.0 % | 2.9 % |
Since inception (on annual basis) i | 4.1 % | 3.0 % |
Key figures
Total fund size | EUR 284.28 M 2021-01-31 |
Share class size | EUR 272.04 M 2021-01-31 |
Number of shares | 237,218 2021-01-31 |
Net Asset Value i | EUR 1,148.94 2021-03-05 |
Turnover rate | 448.28 % |
Morningstar rating â„¢ | |
Fund characteristics per 2021-01-31
Fund | Benchmark | |
---|---|---|
Number of holdings | 163 | 688 |
Duration i | 3.8 | 3.9 |
Yield to maturity | 1.8 % | |
Weighted rating | BB+ | BB+ |
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 2021-01-31
In January we saw a further continuation of the measures related to containing the COVID-19 virus. The increase in infections with new, and in some cases more infectious virus strains is causing concerns and is forcing countries to extent the lockdowns or even increase measures. The effect of the lock downs on the economy is mainly visible in the services sector. We saw that reflected in a further drop in services PMI’s in January. At the same time manufacturing activity is still holding up very well. As certain parts of the economy continue to be strong. The delays in the vaccine roll-out also dampen the near term economic outlook. Production disruptions with the AstraZeneca vaccine resulted in further delays in the vaccination program in Europe. However more countries are now speeding up there programs, with the UK leading the pack in Europe with per end of January already reaching 14.1% of the population vaccinated with one shot. The increase in vaccinations is improving the outlook for a more permanent recovery in the second half of this year as social distancing measures will gradually be removed. Especially in the combination with large fiscal and monetary stimulus.
On the fiscal side support continuous to be strong. In the US, the democrats managed to get a majority in the Senate, after they won 2 republican seats. This will now give the democratic party the majority in both the house and the senate, increasing the changes of further stimulation packages for the US economy. After the inauguration, president Biden announced a proposal for a further increase in the COVID relief package of $1.9 trillion.
Also central banks remain very accommodative. Central bank meetings last month re-iterated previous views. As expected, the European Central Bank (ECB) did not take any new measures for its monetary policy. The thread in the press conference afterwards was vague in terms such as "we strive for favourable financing conditions" and "we take a holistic approach". This vagueness implies that the central bankers keep their hands free to adjust their policy in the future if they think this is necessary. If that happens, it will likely be more monetary easing rather than less. The January FOMC meeting provided few surprises. The FED highlighted that vaccine developments will be critical to the path of the economy. The FED did signal that the economic outlook has improved for this year in response to vaccines and fiscal policy developments. Nonetheless, the central bank continued to echo the dovish rhetoric on inflation and reiterated that it was "premature" to contemplate the possible timeline for tapering of asset purchases.
Company earnings season kicked off in January. In the US 52% of the S&P companies have reported, showing a record high number of beats (85%). The size of those beats are roughly in line with last quarter at 17%, which is close to the highest on record. Also in Europe companies have, in majority, reported better results than expected. Still it did not always result in the market rewarding these better than expected earnings. In most cases estimates have continued to lag the macro data. Also the worry of further lockdowns and the impact that will have on results in the coming period reduced market enthusiasm somewhat.
The supportive combination of inflows, relatively limited net supply and ECB buying, resulted in strong demand for credit in January. Economic data was a bit mixed, and there was a consistent theme of underperformance in COVID exposed names – airlines and airports in particular were notably wider. But weakness was generally company specific. A new round of Italian political instability had only a minor impact on Italian spreads; while Italian financials did sell off in the second half of the month, Italian names ended January broadly in line with other European banks. The bond buying programs of central banks are providing support to the market. The ECB buying of corporate bonds continued in January with slightly over €5 billion in purchases. We expect the CSPP to continue to provide a strong tailwind in 2021 as the ECB will have the ability to increase their efforts to almost €100 billion in corporate bond buying in 2021 via the CSPP and via the PEPP program even more is possible if needed.
In January subordinated financials were the underperformers with a widening of 4 basis points. Despite the limited supply in the sector, financials generally widened with Italian banks like for instance Unicredit and Intesa amongst the worst performers. Also the subordinated debt heavy insurance sector widened by 10 basis points.
For corporates, COVID exposed travel names, like Lufthansa and International Consolidated Airlines Group, suffered as did names with a lot of subordinated debt, and it seemed that single name concerns were more important than sector, rating or duration leading to a mixed set returns. Media, and retail outperformed the index.
The supply of new BB bonds in January was in line with previous year. BB-rated corporates issued for €4.7 billion in new bonds. Noteworthy for the funds universe was the relatively large supply in hybrids. There was € 7 billion issued in January, considerably more than the €2 billion that was issued in January last year. In fact, hybrids have already exceeded the sum of issuance of the first 4 months of last year. Another noteworthy fact is the ongoing drop in new issue premia. As demand for bonds remains very high and secondary liquidity low, investor are increasingly looking at the new issue market to buy bonds resulting in often no or in some cases even negative new issue premium.
During the month, the portfolio’s sensitivity to market trends varied between 105% and 110%. The portfolio therefore held an overweight positioning in terms of market risk.
Our positioning in food & beverage, insurance and retail performed relatively well in January. Our position in real estate and automobiles & parts detracted from performance.
At individual company level, positive contributions came from the overweight in Kraft Heinz, Tesco and the underweight in Deutsche Lufthansa. Also the overweights in Netflix and Wienerberger added to performance. Our overweight in Zf Friedrichshaven and hybrid issues of Volkswagen detracted from performance as did our overweight in hybrid issues from EDF.
In January the Fund participated in new deals from amongst others hybrid issues from Abertis and Total.
Outlook
We remain mildly constructive on the market. Although we see the significant positive effect that a working vaccine will progressively have on the economy in the longer term, we do remain concerned on the near term economic growth expectations. We expect economic growth momentum to continue to be weak in the near term, but have a positive view on a 3-6 month horizon with a recovery expected by the end Q2. Companies remain very much bond holder focussed. This supports the fundamental quality. However after the rally in 2020 valuations are starting to look expensive. Finally, the technical backdrop still remains very robust as a result of the ECB’s willingness and ability to provide liquidity to the government and corporate bond markets combined with limited net supply.
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 2021-01-31 (rebased)
Performance per 2021-01-31
Fund | Benchmark | |
---|---|---|
1 month | 0.3 % | 0.3 % |
3 months | 4.4 % | 4.1 % |
This year | 0.3 % | 0.3 % |
2018 | -2.5 % | -2.9 % |
2019 | 10.8 % | 10.1 % |
2020 | 3.9 % | 1.9 % |
1 year (on annual basis) | 4.2 % | 2.4 % |
3 years (on annual basis) i | 4.0 % | 2.9 % |
Since inception (on annual basis) i | 4.1 % | 3.0 % |
Dividends
Distributing | No |
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 (2021-01-31)
Sector allocation (2021-01-31)
Rating allocation (2021-01-31)
Top 10 holdings (2021-01-31)
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.
Ongoing charges
Management fee i | 0.520 % |
Service fee i | 0.10 % |
Taxe d'abonnement i | 0.01 % |
Expected ongoing charges i | 0.63 % |
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
Share class | I i |
Investor type | Institutional |
Distributing | No |
Benchmark i | BofA Merrill Lynch Composite Index |
Reference index i | BofA Merrill Lynch BB-B High Yield Constrained Index |
Duration hedged | No |
Investment category | Credits |
Universum | Credits denominated in euro |
Inception date | 2017-07-31 |
Domicile | Luxembourg |
May be offered to professional investors only in | Belgium, France, Germany, Italy, Luxembourg, 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„¢ | |
Tradability
Minimum subscription | Initial subscription: €50,000, additional subscriptions: €10,000 |
Listed | no |
Subscription/Redemption Frequency | Daily |
ISIN i | LU1624254121 |
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.
Factsheets
Annual Reports
Semi- Annual Reports
Key Investor Information
Sustainability related disclosures
Formal documents other
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:
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ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.
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Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.
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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
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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 Partiesâ€), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
ESG Report




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.