Kempen Lux Euro High Yield Fund Class I

Profile

Kempen International Funds SICAV – Kempen (Lux) Euro High Yield Fund (the Fund) invests primarily in credits that do not have an investment grade rating (lower than BBB-) and are denominated in Euros. The Fund may deviate from the benchmark, the BofA Merrill Lynch Composite Index, which only includes financial instruments with a minimal rating of BB- (known as ‘High Yield’).

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

Alain van der Heijden, Rik den Hartog, Heinie Hakker, Harold van Acht, Sipke Moes, Luuk Cummins, Pim van Mourik Broekman
More information can be found on the documents page of this fund

Key figures

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Total fund size
EUR 17.95 M 2017-09-30
Number of shares
15,597 2017-09-30
Net Asset Value i
EUR 1,017.59 2017-11-21

Fund characteristics per 2017-09-30

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  Fund Benchmark
Number of holdings 101 534
Duration i 4.4 4.1
Yield to maturity 2.6 % 2.2 %
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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.

Market developments per 2017-09-30

The spread on the ML Q964 Index tightened by 6 basis points to 147 basis points above the swap curve in September. The index earned an absolute return of 0.35%. German 10-year government bond yields finished September at 0.46%, 10 basis points higher than at the end of August.

September was characterised by spread compression in the general High Yield market, whereby bonds with higher spreads tightened more sharply than those with lower spreads. Strong technical factors combined with persistently robust macro-economic data were supportive of demand for High Yield bonds. Within the fund’s investment universe, subordinated bonds issued by non-financial companies (hybrids) performed particularly well. Over the past year, rating agencies have announced more upgrades to ratings than downgrades for the first time since 2015. This positive technical climate ultimately weighed more heavily than the individual concerns currently preoccupying investors. These included the geopolitical crisis in Korea, potential further interest rate hikes by the Fed and it reducing its balance sheet, growing constitutional tensions between the Spanish and Catalonian governments and the economic losses caused by a series of hurricanes in the US and Caribbean islands.

In September, the ECB failed to provide clarity on how it intends to scale back its bond-buying programmes next year. However, it is becoming clear that the Corporate Sector Purchase Programme, or CSPP, has not been reduced proportionally in line with the initial tapering of the QE programme. Earlier this year, this programme was reduced from EUR80 billion to EUR60 billion per month. The ECB purchased EUR8 billion in credits in September. This means that the ECB now holds about 10% of all eligible corporate bonds. The bond-buying programmes are also important to the High Yield market, given that the search for additional spreads is now being extended to non-eligible bonds.

One sector in which spreads did respond to the losses caused by the hurricanes was the reinsurance sector. Having already been confronted with the prospect of higher claims in the wake of Hurricane Harvey at the end of August, the sector was hit by two further hurricanes (Irma and Maria) and a severe earthquake in Mexico. So far, it seems likely that these events will chiefly have an impact on the third-quarter earnings of reinsurers and to a much lesser extent on their solvency levels. Nevertheless, concerns about the sector’s capital position could arise if additional disasters occur in the near future and if the reinsurance sector has not yet been able to raise premiums significantly.

In view of the robust economic climate, increasing earnings and focus among management teams on consolidating balance sheets, we remain positive about the credit cycle at High Yield companies. In September, German steel conglomerate Thyssenkrupp announced it was to merge its European steel activities with those of Tata Steel. At the same time, the company issued EUR1.4 billion in new shares. This has caused a sharp improvement in the company’s credit profile. In contrast, many Investment Grade companies are experiencing growing shareholder pressure to increase leverage. In September, a number of High Yield companies were rewarded with positive outlooks prompted by improved creditworthiness. Examples of such companies in our investment universe were Schaeffler, Equinix and FCA.

Eight bonds were issued in September that will be included in the ML Q964 benchmark, including two bonds issued by Softbank for a total of EUR2.25 billion, a lower tier-2 bond issued by Barclays worth EUR1.5 billion, and bonds worth EUR1 billion issued by Equinix. The number of companies in the benchmark fell from 241 to 238, chiefly due to bonds maturing. The total size of the investment universe remained more or less unchanged at over EUR430 billion.

Portfolio developments per 2017-09-30

The portfolio earned a return of 0.44% and in doing so outperformed its benchmark by 9 basis points. Across the month, the portfolio’s sensitivity to market trends varied between 105% and 109%. The portfolio therefore held a relatively slight overweight positioning in terms of market risk.

Our positioning in the insurance, telecom and retail sectors performed relatively well in September. In contrast, our positioning in the media, oil & gas and industrial goods sectors contributed negatively. Our liquidity position contributed negatively.

At individual company level, the overweights in Telecom Italia, Volkswagen, ASR, Total, Engie and Teva, together with the underweights in Softbank, Nets and Worldpay, contributed positively. Our overweights in BPCE and Argenta Spaarbank and underweights in Fiat Chrysler, Bayer, Moby and Saipem made a negative contribution.

In September, the Fund participated in new bond issues by Voestalpine, Commonwealth Bank of Australia (subordinated), Metsä Board and Softbank.

Outlook
We continue to be moderately positive about the European market for High Yield bonds. The lack of dispersion in the spread premiums that companies with wide-ranging levels of creditworthiness are having to pay remains a serious cause for concern. Moreover, from a historical perspective spreads are still very tight. We also see risks in the current conflict between the US and North Korea and in inflation rising more rapidly than expected due to the upturn in the global economy. The robust economic climate in Europe, our positive outlook on the credit cycle and strong technical factors, partly due to the persisting indirect support for the European High Yield bond market deriving from the ECB’s CSPP, all serve to support our slight overweight positioning in terms of market risk.
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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.

Dividends

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Distributing
No
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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 (2017-09-30)

Fund
Benchmark
11.9 %
0-3 year
19.7 %
13.9 %
3-5 year
26.7 %
30.6 %
5-7 year
27.6 %
20.8 %
7-10 year
20.0 %
19.3 %
> 10 year
6.1 %
4.4 %
Cash
0.0 %
Totaal
101 %
100 %

Sector allocation (2017-09-30)

27.2 %
Consumer Goods & Services
17.1 %
Industry
11.9 %
Basic Materials
10.2 %
Telecom & Technology
10.2 %
Banks
7.6 %
Utilities
5.7 %
Insurance
3.4 %
Other
2.5 %
Health Care
2.4 %
Energy
1.8 %
Financial Services & Real estate
Totaal
100 %

Rating allocation (2017-09-30)

5.5 %
A
16.4 %
BBB
71.9 %
BB
1.7 %
Not Rated
4.4 %
Cash
Totaal
100 %

Top 10 holdings (2017-09-30)

2.2 %
3.125% Softbank Group 2017-25
2.1 %
2.625% Teolisuuden Voima 2016-23
1.9 %
4.561% Casino Guichard 2013-23
1.9 %
3.625% Telecom Italia 2016-24
1.8 %
2.750% Thyssenkrupp 2016-21
1.8 %
4.000% Unitymedia Hessen 2014-25
1.8 %
3.000% Arcelormittal 2014-19
1.7 %
2.375% Cellnex Telecom 2016-24
1.7 %
4.750% International Game Tech 2015-23
1.7 %
1.000% Nokia 2017-21
Totaal
18.7 %
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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

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Management fee i
0.52 %
Service fee i
0.10 %
Taxe d'abonnement i
0.01 %
Expected ongoing charges i
0.63 %

Other costs

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Upward swing factor i
0.30 %
Downward swing factor i
0.30 %
The swingfactor is applicable if the sum of in and outflow (end trading day) is more than a pre defined percentage ( the so called ‘threshold’) of the fund size. The level of the threshold can vary; investors can request KCM for information about the thresholds that were applied in the past. As of 22 September 2017 the swing factor has been adjusted from 0.40% to 0.30%.
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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
BofA Merrill Lynch Composite 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, 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.
Custodian
J.P. Morgan Bank Luxembourg S.A.

Tradability

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Minimum subscription
Initial subscription: €50,000, additional subscriptions: €10,000
Listed
no
Pricing frequency
Daily
ISIN i
LU1624254121
Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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 High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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.

KCM Vision

Kempen Capital Management is an asset manager with a long-term investment approach. We strongly believe in engaged shareholdership that benefits all stakeholders. As a long-term responsible investor, we firmly believe that active ownership and shareholder engagement contribute to positive change across the board.

Our KCM wide approach to responsible investment

To put our vision into action we engage with our investment targets on a wide array of strategic, financial, environmental, social and governance (ESG) topics. Our long-term investment worldview paired with thorough analysis and an experienced and diverse ESG team allow us to use both voting and engagement as means to consistently encourage positive change. Through this process of constructive engagement, we are able to contribute to the development of principles and standards of corporate responsibility within companies.

Kempen (Lux) Euro High Yield 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 Netherlands Authority for the Financial Markets.

The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. 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/investmentfunds).

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.