- Kempen
- Kempen Lux European High Dividend Fund Class I
Kempen (Lux) European High Dividend Fund - Class I
Profile
The Fund primarily aims to generate a better long-term total return than the MSCI Europe Total Return Index (net dividends reinvested), comprising capital gains or losses plus net dividend.
Management team
Performance per 2021-02-28 (rebased)
Performance per 2021-02-28
Fund | Benchmark | |
---|---|---|
1 month | 4.3 % | 2.5 % |
3 months | 5.1 % | 4.2 % |
This year | 3.9 % | 1.8 % |
2018 | -8.2 % | -10.6 % |
2019 | 17.0 % | 26.0 % |
2020 | -11.2 % | -3.3 % |
1 year (on annual basis) | 5.4 % | 8.9 % |
3 years (on annual basis) i | 0.2 % | 4.3 % |
5 years (on annual basis) i | 3.8 % | 6.5 % |
Since inception (on annual basis) i | 7.3 % | 8.7 % |
Key figures
Total fund size | EUR 11.25 M 2021-02-28 |
Share class size | EUR 2.62 M 2021-02-28 |
Number of shares | 1,333 2021-02-28 |
Net Asset Value i | EUR 2,120.71 2021-04-08 |
Turnover rate | 34.75 % |
Morningstar rating â„¢ | |
Morningstar Analyst rating | Bronze |
Fund characteristics per 2021-02-28
Fund | Benchmark | |
---|---|---|
Number of holdings | 51 | 434 |
Dividend yield i | 3.87 % | 2.43 % |
Weighted average market capitalization i | EUR 38,055 M | EUR 68,099 M |
P/E ratio i | 13.37 | |
Active share i | 81.65 % |
Developments per 2021-02-28
Sectors and stocks that had been hit hard by the Corona crisis last year, continued their rebound that started in the fourth quarter of 2020. Value stocks outperformed growth stocks, which contributed to the relative outperformance of the Fund. Both sector allocation and stock selection were strongly positive. The energy sector was the best performing sector after another strong month for the oil price. In addition to oil supply cuts by the OPEC, the extreme cold weather in Texas knocked out an important part of the US oil production for weeks. At the same time, oil demand is expected to recover during the year as lockdown measures in several countries should be eased. Defensive sectors such as telecom, utilities and health care lagged sharply in February as investors favoured more cyclical sectors given the optimism on the economic outlook. Compared to the high dividend universe (companies with a yield over 2.5%) the Fund also outperformed.
Trading was limited in February as we will implement the quarterly rebalance in March.
Almost a third of the holdings in the Fund gained over 10% in February. One of the best performing stocks was Repsol. Like most oil companies, it has lowered its capital investments and operational costs drastically in 2020 and will now be profitable at a much lower oil price than in the past. Therefore the company benefits greatly from increases in the oil price. In addition, it was the first oil company to announce a zero-carbon ambition by 2050. During its recent strategy day, Repsol focused on expanding its low carbon and renewable energy activities. Repsol expects that 40% of its capital employed would be in the low-carbon assets in 2030. We see Repsol as a good example how financial goals and sustainability goals play a combined role in our investment case.
Over the past few years, the equity market has favored companies with short-term earnings predictability rather than look at the potential to add value over the cycle. Given the uncertain outlook, part of that short-termism was certainly justified. This has resulted in a large valuation gap in the market as a handful of well-known names appear priced for perfection, while others look priced for a deep depression. We agree that several of those ‘quality’ companies were an attractive proposition, either because of their defensive nature or a long-term growth opportunity regardless of the current economic situation. However, in our view even the best company is not a good investment at any price. Since November last year, the valuation gap slightly narrowed as the vaccine greatly raised the odds of the economic situation normalizing in 2021. When the situation normalizes further this should be very positive for both the absolute and relative performance of the Fund. The first signs of this have continued so far this year.
We currently expect a dividend yield of around 4% for the Fund. This number is indicative and based on current figures with an outlook filled with uncertainties and therefore based on conservative estimates. Based on those estimates we foresee a 15-20% increase in dividends in 2021.
The Fund trades at an exceptional discount versus the market (the average valuation of all the holdings in the Fund versus the broader equity market). Historically, this has led to a strong relative performance on the medium term. Also, the absolute valuation of the strategy is compelling. We continue to focus on attractively valued companies, that have good capital discipline and generate positive cash flows through the cycle. In summary, the current environment offers the opportunity to buy a well-diversified portfolio with solid earnings power at an attractive valuation. In addition, ESG (Environmental, Social and Governance) is fully incorporated in our investment process. A positive ESG development can add value to the investment case.
Performance per 2021-02-28 (rebased)
Performance per 2021-02-28
Fund | Benchmark | |
---|---|---|
1 month | 4.3 % | 2.5 % |
3 months | 5.1 % | 4.2 % |
This year | 3.9 % | 1.8 % |
2018 | -8.2 % | -10.6 % |
2019 | 17.0 % | 26.0 % |
2020 | -11.2 % | -3.3 % |
1 year (on annual basis) | 5.4 % | 8.9 % |
3 years (on annual basis) i | 0.2 % | 4.3 % |
5 years (on annual basis) i | 3.8 % | 6.5 % |
Since inception (on annual basis) i | 7.3 % | 8.7 % |
Dividends
Distributing | No |
Risk analysis (ex post) per 2021-02-28
3 years | Since inception | |
---|---|---|
Maximum drawdown i | -29.46 % | -29.46 % |
Tracking error i | 4.92 % | 3.57 % |
Information ratio i | -0.83 | -0.39 |
Beta i | 1.18 |
Top 5 contribution (2021-02-28)
Contribution i | Performance i | |
---|---|---|
Repsol | 0.52 % | 28.23 % |
ING Groep | 0.49 % | 24.21 % |
AIB Group | 0.38 % | 26.73 % |
Wartsila OYJ | 0.34 % | 17.22 % |
BAWAG Group | 0.31 % | 19.36 % |
Bottom 5 contribution (2021-02-28)
Contribution i | Performance i | |
---|---|---|
GlaxoSmithKline | -0.22 % | -8.92 % |
Unilever PLC | -0.20 % | -9.22 % |
EDP - Energias de Portugal | -0.16 % | -8.24 % |
Ahold Delhaize Koninklijke | -0.14 % | -7.42 % |
Telenet Group | -0.11 % | -5.90 % |
Geographic allocation (2021-02-28)
Top 10 holdings (2021-02-28)
Sector allocation (2021-02-28)
Ongoing charges
Management fee i | 0.700 % |
Service fee i | 0.20 % |
Taxe d'abonnement i | 0.01 % |
Expected ongoing charges i | 0,91 % |
Share class details
Share class | I i |
Investor type | Institutional |
Distributing | No |
Benchmark i | MSCI Europe Total Return Net Index |
Investment category | High Dividend Equity |
Universum | European equities |
Inception date | 2011-08-25 |
Domicile | Luxembourg |
May be offered to professional investors only in | Belgium, Finland, France, Germany, Italy, Luxembourg, Spain, Sweden, Switzerland, The Netherlands, United Kingdom |
UCITS status i | Yes |
Status | Open-end i |
Base currency | EUR |
Share class currency | EUR |
Management company | Kempen Capital Management N.V. |
Depositary and custodian | J.P. Morgan Bank Luxembourg S.A. |
Morningstar rating â„¢ | |
Morningstar Analyst rating | Bronze |
Tradability
Minimum subscription | Initial subscription: €50.000, additional subscriptions: €10,000 |
Listed | no |
Subscription/Redemption Frequency | Daily |
ISIN i | LU0427930275 |
Factsheets
Annual Reports
Semi- Annual Reports
Key Investor Information
Sustainability related disclosures
Formal documents other
Kempen's vision and mission
Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.
Kempen wide approach to responsible investment
We are committed to create sustainable alpha. The four pillars of our ESG-policy are:
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ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.
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Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.
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Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change
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Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.
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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance. This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.
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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.Â
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Our full voting records are available here.Â
Climate change
As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).
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2050 commitment: Net-zero investor.
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2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.
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2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.[1]
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The Kempen climate change policy can be found here (under climate change policy).Â
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[1]Â We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.
Our fund approach to responsible investment
Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of:  Exclusion, Integration and Active ownership.
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1. Exclusion
The fund follows the clear and transparent exclusion framework developed by Kempen. According to the framework the fund currently excludes companies involved in the production of controversial weapons and tobacco. In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change. Furthermore, the strategy avoids investments in companies that structurally violate ESG criteria, with no willingness to improve. In total 13 companies are excluded from the fund’s European equity universe.
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2. ESG integration
ESG criteria are an integral part of the investment process. The aim is to incorporate material ESG issues in our fundamental analysis. This means that portfolio managers perform an in-depth analysis of ESG data and material ESG risks and reflect them in the assumptions used in the valuation assessment. For example, as demonstrated in the chart on the right side, the ESG impact forms part of our Earnings Power Value (EPV) valuation model.
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3. Active ownership: Engagement
The aim of the engagements our fund participates in is to use our influence as a shareholder to encourage the companies we invest in to improve policies and practices in specific ESG issues. With regard to climate change, we engage generally and take a sector-specific approach for the most carbon-intensive companies and sectors (oil and gas, utilities), as these count for the largest part of the global carbon emissions. A successful engagement reduces the ESG risk and as a result unlocks value in the interest of our clients. In 2018 we held as a team over 200 company engagements on a range of topics. Â
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In order to lay out our guiding investment principles, we send a “welcome letter†to most of the companies we invest in. In this letter, we explain to the company why we made the decision to invest and what our long-term expectations are, including those in the areas of social and environmental responsibilities and corporate governance.Â
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Our fund also believes in the strength of collaborative engagement. Through cooperation with other investors and fund managers, we can increase the leverage of our engagement activities. In 2018, for example, we participated in the CIO Exchange Collaboration on Energy transition. Also, since last year we have been an active participant in the Climate Action 100+ initiative.
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Our engagement focus is on: climate change and energy efficiency, and corporate governance. For example recent activities include:Â
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Shell: We engaged with senior management to set carbon targets with success as Shell announced that it will link its scope 1, 2 and 3 carbon targets to its remuneration. You can find the engagement factsheet here.
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Severstal: We are monitoring Severstal’s health & safety efforts and encouraging the company to establish health & safety best practices that set an example to other Russian steel producers. As a result of the engagement, the company is working on a revised policy and process on labour. You can find the engagement factsheet here.
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3. Active ownership: Voting
Exercising our voting rights is also an essential part of the responsible investment philosophy of our fund. We analyse each vote on a case by case basis and often inform the company about our voting intention ahead of the meeting. Where there is a recommendation to vote against management, we ask the company to clarify their viewpoints. In 2018 we voted at a total of 104 shareholder meetings.Â
Risks
For more information about the mid and long term risks associated with the investments:
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Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Partiesâ€), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
ESG Report




