Kempen Lux Euro Sustainable Credit Fund - Class AN


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 2018-09-30 (rebased)

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Performance per 2018-09-30

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  Fund Benchmark
1 month -0.1 % -0.2 %
This year -0.1 % -0.2 %
Since inception (on annual basis) i -0.1 % -0.2 %
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 190.42 M 2018-09-30
Share class size
EUR 0.00 M 2018-09-30
Number of shares
40 2018-09-30
Net Asset Value i
EUR 25.00 2018-10-18

Fund characteristics per 2018-09-30

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  Fund Benchmark
Number of holdings 240 2279
Duration i 5.2 5.0
Yield to maturity 1.2 % 1.4 %
Weighted rating A- BBB+

Market developments per 2018-09-30

In September, the spread on the iBoxx Euro Corporate Index tightened by 5 basis points to 130 basis points above the government bond curve. The index earned an absolute return of -0.29%. German 10-year government bond yields closed September at 0.47%, an increase of 15 basis points compared to the end of August.

Ongoing concerns about the economic impact of a potential hard Brexit, burgeoning trade wars between the US and its major trade partners and uncertainty about the budgetary discipline of the new Italian government had a negligible impact on sentiment in the capital markets. Combined with the imminent further tapering of the ECB’s bond-buying programme, the increase in investor risk appetite contributed to the higher German 10-year government bond yields.

Subordinated bonds issued by those companies that should profit most from higher interest rates, banks and insurance companies, performed very well. In spite of yet another profit warning from a major player in the auto sector (BMW this time), bonds issued by auto sector companies also performed above average in September. This also applied to bonds issued by companies operating in other cyclical sectors, including construction materials, basic resources and oil & gas. September also saw a limited recovery in spreads on bonds issued by companies with an above-average dependence on emerging markets.

At the end of the month, sentiment towards Italian financial institutions suddenly turned negative when the Italian government presented a disappointing budget for 2019. The planned budget deficit of -2.4%, coupled with policy proposals that could adversely affect the competitiveness of the Italian economy, triggered a negative response on the bond market. Italian 10-year government bond yields shot up by nearly 26 basis points in a single day, and the spread against Germany widened to 267 basis points.

The supply of new bonds was EUR52 billion in September, about 49% up on August, but more or less stable compared to a year earlier. Non-financial sector companies issued EUR32 billion in new bonds last month, while financial sector companies issued EUR20 billion in new bonds. Bonds worth EUR349 billion were issued in the first nine months of this year, a slight decrease of 2% compared to the same period last year.

Portfolio developments per 2018-09-30

The Fund aims to avoid investments that act in breach with the VFI Richtlijn Financieel Beheer Goede Doelen (VFI Directive Financial Management Charities). De VFI Directive consists of basic guidelines and additional guidelines. The basic guideline advises institutions to investigate investments on violations of among others human rights, corruption and protection of the environment. The additional guideline is developed for organisations that want to apply stricter sustainability criteria in the investment policy. This directive includes further exclusions of companies involved in for example nuclear power, alcohol, tobacco, laboratory animals, adult entertainment and genetic modification. Each quarter, the investment universe is screened for violation of the VFI Directive. This screening is conducted based on the MSCI ESG Research database.

During the month, the portfolio’s sensitivity to market trends varied between 95% and 99%. The portfolio therefore held a slight underweight positioning in terms of market risk.

Our positioning in the telecom, food and personal & household goods sectors performed relatively well in September. In contrast, our positioning in the utilities, insurance and industrial goods & services sectors contributed negatively. Our liquidity position (in the shape of cash and government bonds) had a negative impact.

At individual company level, positive contributions came from the overweights in Telefonica, CaixaBank, OMV, Givaudan and JAB Holding. In contrast, the overweights in Iliad and Deutsche Bahn, as well as the underweights in Generali, Volkswagen (excluded) and Total (excluded) made a negative contribution.

In September, the Fund participated in new issues by e.g. Investor, Givaudan, SKF, Stedin, ING Group, FCA Bank, Phoenix Group, Amadeus, Société Générale, Renault, Bertelsman, Santander Consumer Finance and BPCE.

The bond issued by BPCE is what is known as a Local Economic Development Bond (LEDB). The proceeds from this bond will be used by the French bank to provide loans to small businesses and organisations that operate on a non-profit basis in economically challenged areas of France.

We will maintain our conservative positioning for the time being. This reflects our concerns about the trend for de-allocation from the credits asset class, the further tapering of the ECB’s CSPP programme later this year and the higher idiosyncratic risks at companies.

Given the material widening of spreads since the start of this year, we can nevertheless identify a number of interesting investment opportunities that we will use to selectively add more risk to the portfolio.

Performance per 2018-09-30 (rebased)

No chart data available

Performance per 2018-09-30

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  Fund Benchmark
1 month -0.1 % -0.2 %
This year -0.1 % -0.2 %
Since inception (on annual basis) i -0.1 % -0.2 %
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.


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Maturity profile (2018-09-30)

23.5 %
5-7 year
19.8 %
22.0 %
0-3 year
24.5 %
21.6 %
3-5 year
28.2 %
19.9 %
7-10 year
20.2 %
10.9 %
> 10 year
7.4 %
2.1 %
0.0 %
100 %
100 %

Sector allocation (2018-09-30)

33.2 %
14.7 %
Consumer Goods & Services
13.4 %
7.5 %
6.4 %
Financial Services & Real estate
5.9 %
Telecom & Technology
5.0 %
4.2 %
2.7 %
Basic Materials
2.7 %
Health Care
2.2 %
1.2 %
Asset Backed Securities
1.0 %
100 %
The cash position is included in ‘Other’.

Rating allocation (2018-09-30)

3.3 %
0.5 %
8.0 %
10.4 %
37.5 %
40.1 %
45.4 %
49.0 %
1.2 %
0.0 %
2.3 %
Not Rated
0.0 %
2.1 %
0.0 %
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 (2018-09-30)

1.9 %
2.875% Equinor 2013-25
1.7 %
1.500% Enexis 2015-23
1.6 %
3.875% Eurogrid 2010-20
1.2 %
1.000% OMV 2017-26
1.2 %
0.625% BPCE 2018-23
1.1 %
0.500% Daimler 2016-19
1.1 %
0.000% KFW 2016-21
1.0 %
2.375% Priceline 2014-24
1.0 %
0.625% Landwirtsch.Rentenbank 2015-30
1.0 %
1.375% DS Smith 2017-24
12.7 %

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%.

Share class details

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Share class
AN i
Investor type
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
Investment category
European credits
Inception date
May be offered to all investors in
France, Luxembourg, The Netherlands
UCITS status i
Open-end i
Base currency
Share class currency
Management company
Kempen Capital Management N.V.
J.P. Morgan Bank Luxembourg S.A.


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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 that we invest in. Our full voting records are available here.

Our fund approach to Responsible Investment

The Kempen (Lux) Euro Sustainable Credit Fund has a more strict ESG process than other in-house credit funds. In addition to exclusion of companies that are on the general KCM exclusion list, it excludes companies that have violate the UN Global compact or the additional ethical guidelines, such as companies associated with nuclear energy, coal, alcohol, tobacco, adult entertainment and gambling. Furthermore, besides excluding companies associated with the production of controversial weapons, our definition includes any sort of military weapons.

An engagement approach is chosen for companies that are involved in GMO, factory farming, animal testing or if less than 5% of their revenue is derived from the production of fur or fur products.