Kempen (Lux) Global Value Fund Class BN
The primary objective of the Fund is to generate a long-term return in excess of the MSCI World Value Net Total Return USD Index (the "Benchmark"), comprising capital gains or losses plus net dividend.
Performance per 2021-06-30 (rebased)
Performance per 2021-06-30
|This year||0.0 %|
|Total fund size|| |
EUR 12.52 M 2021-06-30
|Share class size|| |
EUR 0.00 M
|Turnover rate|| |
Fund characteristics per 2021-06-30
|Number of holdings||57|
|Dividend yield i||3.10 %|
|Weighted average market capitalization i||EUR 40,119 M|
|P/E ratio i||9.53|
|Active share i||97.24 %|
Developments per 2021-06-30
One of the strongest performers this month was Finnish industrial company WÃ¤rtsilÃ¤. WÃ¤rtsilÃ¤ is the global leader in ship engines and smaller engine-based powerplants. The company reported better than expected first quarter results, reported stronger than expected orders and better trend-signals in key end-markets. The management was cautiously optimistic about the outlook for the company. We also view WÃ¤rtsilÃ¤â€™s strong management on ESG challenges as positive. In our view this strong management reduces the overall risk of the company and we take this into account by reducing the cost of capital. This results in a positive ESG value in our valuation methodology. We believe that WÃ¤rtsilÃ¤ can play an important role in de-carbonizing both the shipping industry as well as in the transition towards a 100% renewable energy future. In June the shares were up 13%.
One of the detractors from performance was Galp Energia, declining 10%. Galp has been transformed by a series of large oil and gas discoveries offshore Brazil in the deep water Santos Basin and offshore Mozambique. Galp also has downstream interests in Portugal and Iberia, a natural gas supply and distribution business, and interests in power generation. Recently, Galp held a Capital Markets Day, which Galp used to communicate its growth trajectory. Investors were disappointed with the growth outlook. What we like is that the company is targeting a 40% cut to emissions from operations by 2030 versus 2017 and net zero by 2050. The dividend yield is approximately 5.7%. Especially with the high oil prices currently, we believe this dividend yield to be sustainable.
We have made a couple of changes to the portfolio in June. We have completely sold our positions in Sino Land, Bridgestone and Swatch. Both Bridgestone and Swatch have experienced a strong runup in the shares, and no longer have valuation upside. We have bought 2 new investments (Valeo and Sun Hung Kai). The most notable new position is Valeo. This French company designs and manufactures automobile components for auto makers globally. There are two things that makes us enthusiastic about this investment. First, Valeo wil benefit from recovering market volumes (which had been impacted by COVID). Second, Valeo is increasingly exposed to innovative technologies like electrification and autonomous driving. Supported by modest assumptions, we believe that the shares are undervalued. Due to the impact of COVID, Valeo had to reduce its dividend in 2020. The expectations are that Valeo will increase its dividend again, which should result in a prospective dividend yield of 3.6% in 2022. Sun Hung Kai is seen as relatively more attractive from a valuation perspective than Sino Land. We also increased our position in LG Corp. Despite strong share price performance, we still believe the shares are undervalued.
In our investment process, we spend a large portion of our time understanding where profitability should be on an over the cycle basis, as this is what determines the cash flows, we will receive as a long-term shareholder. A firm may appear attractive based on its price to earnings ratio or
other headline multiple, but if margins and/or revenue are high, this only gives you limited information about the future returns of an investment. In a diversified portfolio, we are always going to have individual names that disappoint or surprise to the upside. We believe that a value process of bottom up stock picking will lead to more winners than losers. We continue to purchase our investments based on intrinsic value, while ensuring a margin of safety when we select our stocks. We are confident that the portfolio will show attractive risk return characteristics over the next 3 to 5 years.
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.
Performance per 2021-06-30 (rebased)
Performance per 2021-06-30
|This year||0.0 %|
Top 5 contribution (2021-06-30)
|Contribution i||Performance i|
|Wartsila OYJ||0.29 %||13.26 %|
|Merck & Co||0.20 %||11.31 %|
|DeNa||0.20 %||9.83 %|
|Primax Electronics||0.19 %||9.65 %|
|Gilead Sciences||0.16 %||8.51 %|
Bottom 5 contribution (2021-06-30)
|Contribution i||Performance i|
|AIB Group||-0.21 %||-20.33 %|
|Aercap||-0.21 %||-10.51 %|
|Wood Group||-0.21 %||-10.46 %|
|Galp Energia||-0.20 %||-10.10 %|
|Engie||-0.15 %||-4.93 %|
Geographic allocation (2021-06-30)
Top 10 holdings (2021-06-30)
Sector allocation (2021-06-30)
Share class details
|Share class|| |
|Investor type|| |
Institutional & Private
|Benchmark i|| |
MSCI World Value Net Total Return USD Index
|Investment category|| |
|UCITS status i|| |
|Base currency|| |
|Share class currency|| |
|Management company|| |
Kempen Capital Management N.V.
|Depositary and custodian|| |
J.P. Morgan Bank Luxembourg S.A.
|Minimum subscription|| |
Initial Subscription: â‚¬1
|Subscription/Redemption Frequency|| |
|ISIN i|| |
Key Investor Information
Sustainability related disclosures
Formal documents other
Kempen's Vision & 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 clientsâ€™ 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.
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 companiesâ€™ ESG performance.Â 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.
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.
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).
- 2050 commitment: Net-zero investor.Â Â Â
- 2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.Â Â Â
- 2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.
The Kempen climate change policy can be foundÂ hereÂ (under climate change policy).
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
Kempenâ€™s ESG policy is fully implemented in our fundâ€™s investment process across the three relevant pillars of: Exclusion, Integration and Active ownership.
The fund follows the clear and transparent exclusion framework we have developed. According to the framework the fund currently excludes companies involved in the production of controversial weapons and tobacco.Â In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change.Â Furthermore, the strategy avoids investments in companies that structurally violate ESG criteria, with no willingness to improve. In total 177 companies are excluded from the fundâ€™s global equity universe.
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.Â With regard to climate change,Â we prefer to invest in companies that integrate climate risks and opportunities into their organisation, and are able to move towards a low-carbon economy.Â 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.
3. Active ownership
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.Â 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.Â A successful engagement reduces the ESG risk and as a result unlocks value in the interest of our clients. In 2018 we held over 200 company engagements and voted at 104 shareholder meetings.
In order to lay out our guiding investment principles, we send a â€œwelcome letterâ€ 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.
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 and since last year we have been an active participant in the Climate Action 100+ initiative.
* Although Kempen Capital Management N.V.â€™s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the â€œESG 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.