Kempen Lux Euro High Yield Fund Class LR

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. Attention: it is envisaged that this share class will be closed for further subscriptions once the Fund (all share classes combined) reaches a size of € 150 million. The discounted management fee of 32bps will remain for a period of 3 years starting at the launch of the share class, to facilitate the initial growth of the Fund. After this period the Board of Directors will decide on the conditions and future of this share class.

Management team

Alain van der Heijden, Rik den Hartog, Harold van Acht, Sipke Moes, Luuk Cummins, Pim van Mourik Broekman, Quirijn Landman, Marco Zanotto

Performance per 2019-05-31 (rebased)

No chart data available

Performance per 2019-05-31

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  Fund Benchmark
1 month -0.8 % -0.8 %
3 months 1.4 % 1.3 %
This year 5.4 % 5.1 %
2017 2.3 % 1.6 %
2018 -2.4 % -2.9 %
1 year (on annual basis) 4.4 % 3.6 %
Since inception (on annual basis) i 2.9 % 2.0 %
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 34.57 M 2019-05-31
Share class size
EUR 1.40 M 2019-05-31
Net Asset Value i
EUR 26.84 2019-06-24

Fund characteristics per 2019-05-31

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  Fund Benchmark
Number of holdings 132 563
Duration i 3.7 3.8
Yield to maturity 2.3 % 2.5 %
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 2019-05-31

In May, the spread on the ML Q964 Index widened by 28 basis points to 225 basis points above the swap curve. The index earned an absolute return of -0.79% in May. German 10-year government bond yields closed May at -0.20%, a decrease of 21 basis points compared to the end of April.

The sharp decline in government bond yields represented a clear reversal in risk appetite amongst investors compared to last month. Whilst the release of economic data pointing to a further slowing of growth in developed and emerging markets was a contributor, the primary culprit appeared to be an escalation in the United States and China’s trade dispute. The ratcheting up of rhetoric by President Trump and other US administrative officials on the long-term geopolitical strategic threats posed by China, suggests an amicable resolution in tackling concerns about market reciprocity, intellectual property rights, and state-funded exports may no longer be feasible in the near- to medium-term.

Markets took additional fright near the end of the month when President Trump indicated he would implement import tariffs on Mexico, starting at 5% in June, and increasing at a similar magnitude each month until 25%, if the US’s southern neighbour did not take sufficient action to halt the flow of immigrants coming from Central America. Given that shortly before, the US had in fact lifted barriers to the import of aluminium and steel from Canada in order to facilitate the signing of a revised North American free trade agreement, the potential tariffs on Mexico raised fears that the trade policy of the US was becoming completely unpredictable. As US and European corporations have invested billions of dollars in Mexico as part of efforts to optimise their North American supply chains, concerns are rising about the potential for stranded assets and lower levels of corporate profitability going forward.

The unpredictable nature of US trade policy may result in a decline in business confidence and their desire and willingness to invest. Investors are now pricing in multiple interest rate cuts by the US Federal Reserve in the coming 12-18 months, given expectations for a material slowdown in economic growth and accompanying diminished inflationary risks.

At the end of May, the number of bonds that make up the ML Q964 benchmark decreased by 4 to 563, while the number of companies remained stable. Additions to the benchmark included a EUR 500 million lower tier 2 bond issued by Dutch insurer ASR, a EUR 900mln corporate hybrid issued by Italian utility group Enel and bonds issued by French retailing group FNAC and Sweden-based Dometic, a manufacturer of appliances for the recreational vehicle and leisure boat industries. Bonds issued by French retailer Casino will leave the benchmark after the group was downgraded to B1 and B at Moody’s and S&P, respectively. The downgrades were in response to the decision by Casino’s controlling shareholder, Rallye, to file for creditor protection. Bonds issued by US apparel company PVH will leave the benchmark after being upgraded to investment grade.

The amount of bonds issued by non-financial institutions in the European high yield market was EUR 7.1 billion in May, an increase of approximately 31% compared to the year earlier period. For the first time this year single-B’s dominated supply contributing almost a third of total issuance during the month. European high yield bonds totalling EUR 31.5 billion were issued in the first five months of this year, a decrease of 16% compared to last year.

Portfolio developments per 2019-05-31

During the month, the portfolio’s sensitivity to market trends varied between 103% and 111%. The portfolio therefore held an overweight positioning in terms of market risk.

Our positioning in the personal & household goods, basic resources and banking sectors performed relatively well in May. In contrast, our positioning in the telecommunications, industrial goods & services and utilities sectors contributed negatively. Our liquidity position made a positive contribution.

At individual company level, positive contributions came from the overweights in Tesco, PVH and Huntsman, as well as from our underweights in Chemours, thyssenkrupp and Samsonite. In contrast, the overweights in Schaeffler, Lincoln Finance, Engie, Sogecap and Smurfit Kappa, as well as our underweights in Wind and Elis, contributed negatively.

In May, the Fund participated in new bonds issued by Fidelity National Information Services, KKR, Euronet, Enel (corporate hybrid), Vesteda and IHO Verwaltungs (holding company of Schaeffler).

Outlook
Despite the significant widening in spreads during the month of May, we will maintain our defensive positioning. This is primarily driven by our more negative view on global economic growth, as well as our concerns about the US administration’s trade policies, the Italian government’s commitment to fiscal rectitude and the increased risks of a hard Brexit.
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.

Performance per 2019-05-31 (rebased)

No chart data available

Performance per 2019-05-31

Slide to see more
  Fund Benchmark
1 month -0.8 % -0.8 %
3 months 1.4 % 1.3 %
This year 5.4 % 5.1 %
2017 2.3 % 1.6 %
2018 -2.4 % -2.9 %
1 year (on annual basis) 4.4 % 3.6 %
Since inception (on annual basis) i 2.9 % 2.0 %
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 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 (2019-05-31)

Fund
Benchmark
28.2 %
5-7 year
34.3 %
27.0 %
3-5 year
30.2 %
15.9 %
7-10 year
11.4 %
11.7 %
> 10 year
5.0 %
10.4 %
0-3 year
19.1 %
6.8 %
Cash
0.0 %
Total
100 %
100 %

Sector allocation (2019-05-31)

26.0 %
Consumer Goods & Services
18.1 %
Industry
10.8 %
Telecom & Technology
9.8 %
Other
9.7 %
Banks
6.4 %
Basic Materials
6.4 %
Financial Services & Real estate
5.3 %
Utilities
4.3 %
Insurance
1.9 %
Energy
1.4 %
Health Care
Total
100 %

Rating allocation (2019-05-31)

4.0 %
A
21.0 %
BBB
65.3 %
BB
2.0 %
B
0.9 %
Not Rated
6.8 %
Cash
Total
100 %

Top 10 holdings (2019-05-31)

2.9 %
2.875% Thyssenkrupp 2019-24
2.8 %
4.000% Telecom Italia 2019-24
2.7 %
3.625% Netflix 2017-27
2.6 %
1.500% Leonardo 2017-24
2.0 %
2.875% Smurfit Kappa 2018-26
1.8 %
3.375% Volkswagen PERP 2018-24
1.7 %
3.750% Fiat Chrysler Automobile 2016-24
1.7 %
2.125% Volvo 2019-24
1.6 %
4.250% Huntsman 2016-25
1.5 %
3.250% Orano 2013-20
Total
21.2 %
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.

Ongoing charges

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Management fee i
0.32 %
Service fee i
0.10 %
Taxe d'abonnement i
0.05 %
Expected ongoing charges i
0.47 %

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 1%. 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
LR
Investor type
Private
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 all investors in
Belgium, Luxembourg, The Netherlands
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
J.P. Morgan Bank Luxembourg S.A.

Tradability

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Minimum subscription
Initial subscription: €1
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU1626446964
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.

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.

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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.

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1. Exclusion

In line with the general Kempen policy, the Kempen Euro Credit Strategies[1] 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.

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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.

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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.

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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), Glencore on climate action (you can find the engagement factsheet here) and Huntsman on ESG disclosure. In July 2018, Huntsman was upgraded from ‘CCC’ to ‘B’ by MSCI ESG, and the company’s Sustainability report, published in 2018, includes an overview of its progress towards alignment with the UN Global Compact Ten Principles for the first time.

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[1] 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

*

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.

ESG Report
Screening MSCI Research
Screening MSCI Research
UN Global Compact
Source
disclaimer
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.