Kempen Lux Euro Sustainable Credit Fund - Class AN

Profile

Kempen International Funds SICAV - Kempen (Lux) Euro Sustainable Credit Fund (the Fund) invests primarily in credits that have an investment grade rating (of minimal BBB-) and are denominated in Euros. In addition, these companies must comply with strict sustainability criteria. The Fund may invest a small part in credits that are not included in the benchmark.

The benchmark, the Markit iBoxx Euro Corporates Index, only includes bonds with an investment grade rating. The Fund aims to earn a higher total long term return than the benchmark by implementing an active investment policy. In order to achieve this, a diversified portfolio is constructed and investment risks are continuously monitored. Investments are selected on the basis of extensive analysis of the terms and conditions of the bond issues.

In the interest of the shareholders it has been decided to soft open the Fund as per 28 June 2018. As per June 2018 the Fund will continue to accept daily inflow below EUR 10 million from all investors. For investments greater than EUR 10 million please contact the Fund’s relationship manager. Redemptions will still be possible. More information about the soft open can be found in the Notice to shareholders in the tab Documents.

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 2019-10-31 (rebased)

No chart data available

Performance per 2019-10-31

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  Fund Benchmark
1 month -0.3 % -0.2 %
3 months -0.4 % -0.3 %
This year 6.6 % 6.6 %
2018 -0.4 % -0.8 %
1 year (on annual basis) 6.4 % 6.1 %
Since inception (on annual basis) i 5.6 % 4.9 %
Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. 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 523.58 M 2019-10-31
Share class size
EUR 0.24 M 2019-10-31
Number of shares
8,858 2019-10-31
Net Asset Value i
EUR 26.46 2019-12-09

Fund characteristics per 2019-10-31

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  Fund Benchmark
Number of holdings 271 2754
Duration i 5.2 5.2
Yield to maturity 0.5 % 0.6 %
Weighted rating A- BBB+
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

Market developments per 2019-10-31

In October, the spread on the iBoxx Euro Corporate Index tightened by 11 basis points to 113 basis points above the government bond curve. The index earned an absolute return of -0.18%. German 10-year government bond yields closed October at -0.41%, an increase of 16 basis points compared to the end of September.

Sentiment in the capital markets turned more positive during the month as a result of a number of developments.

Firstly, the probability of a near-term hard Brexit scenario diminished considerably. The British parliament passed legislation that forced Prime Minister Boris Johnson to request a formal delay in leaving the European Union from his initial intended date of the 31st October. Whilst the prime minister’s revised agreement with the EU was eventually approved by parliament, the upcoming parliamentary election scheduled for 12th December will determine whether the UK eventually leaves the European Union and, if so, under what terms.

Secondly, for the third time this year, the US federal reserve cut interest rates by 25 basis points. Going forward, the Fed will now adopt a more data dependent, reactive approach in deciding on whether to cut interest rates further. Earlier in the month, the Fed had announced that it would begin purchasing a sizeable amount of US treasury bills on an ongoing basis to address liquidity bottlenecks in the intrabank funding markets.

Thirdly, the rhetoric from US and Chinese governmental officials appeared to suggest that prospects for a trade deal were improving. Such a deal would remove the threat of further tariff increases and would see the Chinese government ramp up purchases of US agricultural- and energy products. Whilst longer-term issues like intellectual property theft and market reciprocity may not be fully addressed as part of any initial trade agreement, markets are likely to view any signing of a deal positively. At the same time that discussions between the US and China appeared to be improving, high-ranking US government officials indicated that the EU automotive industry is unlikely to face tariffs on the export of vehicles to the US.

Fourthly, a number of indicators suggested that global economic growth may be stabilising. For example, the Caixin China General Manufacturing PMI reached a level of 51.7, the highest since February 2017. Economic growth in the Eurozone during the third quarter came in at 0.2% which was equal to the previous quarter and better than expected. Nonetheless, other indicators remain relatively weak. For instance, Japanese manufacturing activity declined to the lowest level since June 2016, whilst the services sector in Japan also contracted for the first time in three years. A key concern for the markets in the months ahead is the extent to which restructuring activity in the industrial segments of the economy and the accompanying loss of jobs will negatively impact activity levels in the services segments of the economy.

Finally, Q3 earnings results have not been as weak as initially feared. The majority of companies appear to be pro-actively aligning their cost structures, capital expenditure and inventory levels to the subdued demand environment and thereby defending operating margins and credit profiles.

The supply of new bonds was EUR 49 billion in October. Whilst down by approximately 39% compared to the record-setting levels of September, supply was up by more than two and half times compared to the year-earlier level. Non-financial sector companies issued EUR 17 billion in new bonds last month, while financial sector companies issued EUR 32 billion in new bonds. New bonds totalling EUR 485 billion were issued in the first ten months of this year, representing an increase of 32% compared to the same period last year.

Portfolio developments per 2019-10-31

During the month the portfolio’s sensitivity to market trends varied between 92% and 98%. The portfolio therefore held a underweight positioning in terms of market risk.

Our positioning in the food & beverage, real estate and industrial goods & services sectors performed relatively well in October. In contrast, our positioning in the automotive, utilities and health care sectors contributed negatively. Our liquidity position (in the form of cash and government bonds) had a negative impact.

At individual company level, positive contributions came from the overweights in Coca-Cola HBC, ZF Friedrichshafen, Verizon Communications, Unilever and Takeda Pharmaceutical. In contrast, the underweights in Volkswagen (excluded) and Banco Santander, as well as the overweights in Renault, Schaeffler and voestalpine contributed negatively.

In October, the Fund participated in new bond issues from ZF Friedrichshafen, BPCE, Unibail-Rodamco, JPMorgan Chase, Dover Corporation, Daimler and CPI Property Group.

The bond issued by CEE-based real-estate group CPI Property Group was a so-called “green bond”. Proceeds from this bond issue will be used by CPI to improve the environmental performance of its properties and contribute to the group’s climate impact mitigation objectives.

Outlook
We still see sufficient opportunities to invest in the bonds of companies with improving credit profiles at attractive spread levels. At the same time, we intend to capitalise on the ongoing spread compression, particularly in CSPP eligible bonds, between lower and higher rated issuers to high-grade the overall quality of our portfolio and retain a defensive positioning. The revival of the ECB’s corporate bond buying program, ongoing inflows into the investment grade credits asset class and expectations for limited bond supply heading into the end of the year mean we will refrain from adopting a significant underweight position.
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

Performance per 2019-10-31 (rebased)

No chart data available

Performance per 2019-10-31

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  Fund Benchmark
1 month -0.3 % -0.2 %
3 months -0.4 % -0.3 %
This year 6.6 % 6.6 %
2018 -0.4 % -0.8 %
1 year (on annual basis) 6.4 % 6.1 %
Since inception (on annual basis) i 5.6 % 4.9 %
Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. 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 Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

Maturity profile (2019-10-31)

Fund
Benchmark
30.6 %
3-5 year
27.3 %
19.3 %
5-7 year
21.0 %
18.1 %
0-3 year
25.4 %
15.1 %
7-10 year
17.4 %
13.2 %
> 10 year
8.9 %
3.7 %
Cash
0.0 %
Total
100 %
100 %

Sector allocation (2019-10-31)

31.4 %
Banks
12.4 %
Utilities
12.2 %
Consumer Goods & Services
7.9 %
Telecom & Technology
7.0 %
Financial Services & Real estate
6.8 %
Health Care
5.7 %
Industry
4.4 %
Other
3.9 %
Insurance
3.6 %
Energy
2.9 %
Sovereign bonds
1.7 %
Basic Materials
0.2 %
Asset Backed Securities
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2019-10-31)

Fund
Benchmark
3.2 %
AAA
0.4 %
4.6 %
AA
10.5 %
43.3 %
A
39.4 %
42.1 %
BBB
49.7 %
1.7 %
BB
0.0 %
1.3 %
Not Rated
0.0 %
3.7 %
Cash
0.0 %
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 (2019-10-31)

1.8 %
3.875% Eurogrid 2010-20
1.6 %
1.500% Enexis 2015-23
1.3 %
0.736% Bank of America 2017-22
1.2 %
1.750% Morgan Stanley 2016-24
1.2 %
0.875% Equinor 2015-23
1.1 %
0.750% PSA Banque France 2018-23
1.1 %
1.375% Terna 2017-27
1.0 %
0.375% KFW 2015-30
0.9 %
0.375% KFW 2016-26
0.9 %
2.000% Renault 2019-24
Total
12.1 %
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

Ongoing charges

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Management fee i
0.32 %
Service fee i
0.15 %
Taxe d'abonnement i
0.05 %
Expected ongoing charges i
0.52 %

Other costs

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Upward swing factor i
0.20 %
Downward swing factor i
0.20 %
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 1 January 2018 the swing factor has been adjusted from 0.25%/0.25% to 0.20%/0.20%.
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

Share class details

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Share class
AN i
Investor type
Private
Distributing
No
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
No
Investment category
Credits
Universum
European credits
Inception date
2018-09-20
Domicile
Luxembourg
May be offered to all investors in
France, 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
LU0979490777
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.

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.6

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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 (Lux) Euro Sustainable Credit Fund primarily aims to generate a long-term return in excess of the Markit iBoxx Euro Corporates Index (the “Benchmark”), comprising capital growth and income, by investing in corporate bonds issued by companies which comply with strict sustainability criteria.

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We strive to invest in companies that have a lower carbon intensity than their sector peers, or in companies that are willing and able to considerably lower their carbon intensity to a level below their sector peers – ideally in line with the Paris goals. We encourage this via continuing engagements with companies, clients, investors and other stakeholders.

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Kempen’s ESG policy is implemented in our fund’s investment process by the following pillars: Exclusion, Integration and Active ownership.

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Exclusion & Avoidance

In line with the general Kempen policy, the Kempen (Lux) Euro Sustainable Credit Fund excludes all companies on the KCM Exclusion- or Avoidance list.

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Companies that ‘Fail’ marked against the criteria of the United Nations Global Compact or those companies that attract a red flag on the MSCI ESG impact monitor are excluded.

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Companies scoring an MSCI ESG rating CCC are excluded. Companies that score a MSCI ESG rating of B are excluded on a comply or explain basis.

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The Kempen (Lux) Euro Sustainable Credit Fund also excludes companies based on additional sustainability criteria as listed in the table below.

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More information on our exclusion criteria and thresholds can be found here.

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EXCLUSION CRITERIA KEMPEN (LUX) EURO SUSTAINABLE CREDIT FUND

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KEMPEN CRITERIA

ADDITIONAL SUSTAINABILITY CRITERIA

Business Conduct

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x    Human Rights

v

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x    Labour

v

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x    Environment

v

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x    Anti-corruption

v

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Product Involvement

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x    Controversial Weapons

v

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x    Tobacco

v

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x    Adult Entertainment

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v

x    Alcohol

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v

x    Animal Welfare & GMO

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v

x    Gambling

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v

x    Power Generation Nuclear

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v

x    Power Generation Carbon Intensive

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v

x    Thermal Coal

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v

x    (Un)conventional Oil & Gas Extraction

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v

x    Weaponry

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v

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ESG Integration

The assessment of companies’ ESG profiles is an integral part of our investment process. We assess each company on a case-by-case basis, taking into account material risks in a given industry in combination with the company’s respective risk exposure, practices and disclosure.

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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.

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Active Ownership

As active investors we perform comprehensive engagements with our portfolio companies with the objective to unlock value and reduce risk.

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Our engagement process defines clear objectives of which the progress and result is tracked and well documented. If at any stage the company refuses to cooperate, divestment has to be considered.

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Engagement examples can be found here

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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.

ESG Report
Febelfin
Label ISR
Screening MSCI Research
Screening MSCI Research
UN Global Compact
Source
disclaimer
Kempen (Lux) Euro Sustainable Credit 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 Dutch Authority for the Financial Markets (AFM). 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 of the Fund are available at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg 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.