As of 10 September 2019 Kempen (Lux) European Small-cap Fund is incorporated into Kempen (Lux) Sustainable European Small-cap Fund. Read the official announcement here.

Kempen Lux Sustainable European Small-Cap Fund - Class BN

Profile

Kempen (Lux) Sustainable European Small-cap fund (the Fund) offers Investors the opportunity to invest in an actively and professionally managed portfolio of smaller listed European companies, while at the same time complying with strict exclusion and sustainability criteria. These are defined as companies with a maximum market capitalisation at the time of initial purchase of either EUR 5 billion, or the highest market capitalisation of any company included in the MSCI Europe Small Cap Total Return Index, whichever is the greater. The strategy primarily aims to generate a better long-term return than the benchmark.

The portfolio construction process involves a disciplined end to end framework initially utilizing proprietary in-house stock filters screening for high quality and attractively valued stocks. Thereafter,
fundamental in-house research is carried out to identify high conviction investment ideas. The end result is a portfolio of 30-50 stocks, well diversified across all regions and sectors.

On 10 September 2019 Kempen (Lux) European Small-cap Fund was incorporated into Kempen (Lux) Sustainable Small-cap Fund. You can find more information under the Documents tab.

Management team

Michiel van Dijk, Erwin Dut, Sander van Oort; Ingmar Schaefer

Performance per 2020-04-30 (rebased)

No chart data available

Performance per 2020-04-30

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  Fund Benchmark
1 month 12.8 % 11.4 %
3 months -18.7 % -19.4 %
This year -21.5 % -20.8 %
2017 12.0 % 19.1 %
2018 -18.3 % -15.9 %
2019 28.8 % 31.4 %
1 year (on annual basis) -17.2 % -12.8 %
3 years (on annual basis) i -6.2 % -2.4 %
5 years (on annual basis) i -0.9 % 2.1 %
Since inception (on annual basis) i 9.3 % 8.8 %
On 23 October 2013 Kempen SeNSe Fund (KSF) was merged with Kempen (Lux) Sustainable European Small-cap Fund. The results shown of the period before October 2013 are those of KSF. KSF had a similar investment structure and cost structure, but had a different tax regime that could have influenced the returns shown. In November 2013 the rebate free class (BN) of Kempen (Lux) Sustainable European Small-cap Fund was launched. The results shown of the period October 2013 - November 2013 are those of class B of the same fund. The higher management fee of class B has had an impact on the performance quoted. Until 28 February 2017 the benchmark of the Fund was the MSCI Europe Small Cap Total Return Index, of which the constituents are adjusted by reducing the UK component by 50%. 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 188.72 M 2020-04-30
Share class size
EUR 85.28 M 2020-04-30
Number of shares
2,478,007 2020-04-30
Net Asset Value i
EUR 34.94 2020-05-26
Turnover rate
55.71 %
Morningstar rating â„¢
The turnover rate figure is per the end of the financial year of the fund and will be updated once a year.

Fund characteristics per 2020-04-30

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  Fund Benchmark
Number of holdings 43 960
Dividend yield i 3.07 % 3.18 %
Weighted average market capitalization i EUR 2,466 M EUR 2,708 M
P/E ratio i 17.33 16.30
Active share i 92.89 %
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Market developments per 2020-04-30

In April the Fund outperformed the MSCI Europe Small-cap Index.

April was marked by the publication of extreme macroeconomic data. For example, the number of Americans filing for unemployment benefits rose by 4-5 million every week in April and already some 30 million Americans have filed initial unemployment claims since the outbreak of COVID-19 mid-March. The oil price is at historical lows and some less liquid variants were even priced negative. Finally, economic growth in China in the first quarter was -6.8%, the lowest rate in 40 years. Despite the flood of negative macro-economic data, global equity markets recovered from the lows seen in March. A growing number of countries reports a gradual decline in statistics on new infections, hospitalizations and fatal COVID-19 casualties. Consequently a number of countries are easing lockdown measures. Additionally, various players in the pharmaceutical industry reported positive test results for a vaccine against COVID-19 and offer prospects for normalization over time.

In addition to selling out of four names during the month because of a rich valuation and/or a (too) high financial leverage we added two new names to the portfolio which operate relatively resilient business models at attractive valuations following the broader stock market correction. Although the exact impact of the COVID-19 is unknown at this stage we are pleased to have a portfolio of companies that can successfully manage a period of volatility and uncertainty on the back of strong business models and balance sheets. As flagged earlier we continue to focus on the margin of safety in our valuations and remain cautious in estimating a recovery scenario in our models. We believe that recent share price weakness offers opportunities to further strengthen the portfolio in terms of robustness, quality and upside share price potential.

Portfolio developments per 2020-04-30

The best performing stocks in the portfolio in April were BESI, Hikma and TGS. In the broad recovery of equity markets the semiconductor sector stood out again. BESI (+35.2%) participated in this recovery and on top of that the company reported Q1 results and order intake that were above expectations. Also the outlook for the second quarter is one with sequential growth, sector high gross margins and tight cost control. So far the classical recovery in the semiconductor equipment spent follows its normal pattern, but COVID-19 increases uncertainty. The shares of Hikma Pharmaceuticals (+18.4%) posted another strong month. The manufacturer of injectable and generic pharmaceuticals primarily for the US market and branded pharmaceuticals in the Middle East and Northern Africa issued a trading statement in April. The company referred to a strong start to the year as it benefits from increased demand for its products driven in part by COVID-19. The guidance for 2020 was reiterated and might prove to be cautious at the company’s first half 2020 results in August. TGS NOPEC (+38.7%) shares were up sharply in April, rebounding from the lows seen in late March. Sentiment regarding the global pandemic improved and the historic OPEC+ supply cut buoyed the energy sector, despite the volatility in the price of near-term oil contracts. As a leading supplier of seismic data, TGS has an asset light model and a healthy balance sheet with a substantial net cash position. Though a recovery in exploration spending may take a while, we reckon TGS will come out stronger, as they did in past cycles.

The worst performing stocks in the portfolio in April were Fabege, SSP Group and Arcadis. Fabege (-5.4%) reported Q1 results which were good, with 6% LfL rental growth and a loan-to-value that dropped to 32% from 38% last year. The outlook deteriorated as yield requirements increased and tenants face considerable headwinds. With limited retail exposure, only 4% and the highest quality assets in Stockholm, we believe that Fabege is well positioned to weather the storm and acquisition opportunities might arise. The shares of SSP Group (-7.1%) declined during April. News around the relaxation of lockdown measures should be positive for the company however there is still a lack of clarity around public transport capacity post COVID-19 lockdowns. The maximum capacity of the London Underground could for example be limited to 15% and London buses to 12% if a passenger distance of 2m needs to be maintained. This is similar to what the Dutch railway has said as they expect a reduction of 75% of the maximum capacity. It remains to be seen how these measures will work in practice, how they will be enforced and how long they will remain in place. Furthermore, airline passenger exposed peer Dufry issued new equity to weather the current storm which SSP has done in March already. The share price of Arcadis (-2.3%) initially recovered from the lows in March in line with the broader market sentiment. However, in the end they posted a small loss for April following the company’s first quarter results. While revenue, earnings and even outlook were good in light of COVID-19, the company’s cashflow is still held back by software related billing issues in their North American division.

ESG commentary
Befesa provides solutions for industrial waste management, helping recycle hazardous residues from the steel and aluminum industries. We participated in a stakeholder survey and provided feedback on the company's sustainability strategy and priorities. As it is core to Befesa's business model, we encouraged the company to increase its focus on its environmental strategy, e.g. emission, waste and water management, as well as safety and efficiencies of hazardous waste transportation. We proposed to Befesa to take a lifecycle approach when evaluating the environmental performance of its products and operations. Besides defining a framework and data sets to report on, we look for target setting, individual initiatives to achieve the targets, and continuous reporting on progress. We further gave feedback on the stakeholder survey itself, recommending to increase the scope of participants by inviting suppliers and local communities to also participate.
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Performance per 2020-04-30 (rebased)

No chart data available

Performance per 2020-04-30

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  Fund Benchmark
1 month 12.8 % 11.4 %
3 months -18.7 % -19.4 %
This year -21.5 % -20.8 %
2017 12.0 % 19.1 %
2018 -18.3 % -15.9 %
2019 28.8 % 31.4 %
1 year (on annual basis) -17.2 % -12.8 %
3 years (on annual basis) i -6.2 % -2.4 %
5 years (on annual basis) i -0.9 % 2.1 %
Since inception (on annual basis) i 9.3 % 8.8 %
On 23 October 2013 Kempen SeNSe Fund (KSF) was merged with Kempen (Lux) Sustainable European Small-cap Fund. The results shown of the period before October 2013 are those of KSF. KSF had a similar investment structure and cost structure, but had a different tax regime that could have influenced the returns shown. In November 2013 the rebate free class (BN) of Kempen (Lux) Sustainable European Small-cap Fund was launched. The results shown of the period October 2013 - November 2013 are those of class B of the same fund. The higher management fee of class B has had an impact on the performance quoted. Until 28 February 2017 the benchmark of the Fund was the MSCI Europe Small Cap Total Return Index, of which the constituents are adjusted by reducing the UK component by 50%. 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
Yes
Last dividend
EUR 0.50
Ex-date last dividend
2020-01-16
Number of distributions per year
2
Dividend calendar

Risk analysis (ex post) per 2020-04-30

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  3 years Since inception
Maximum drawdown i -30.36 % -62.09 %
Tracking error i 5.41 % 5.19 %
Information ratio i -0.70 0.11
Beta i 1.03 0.99
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Top 5 contribution (2020-04-30)

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  Contribution i Performance i
BE Semiconductor Industries 0.83 % 35.12 %
TGS Nopec Geophysical 0.68 % 38.70 %
Hikma Pharmaceuticals 0.68 % 18.49 %
BAWAG Group 0.61 % 21.22 %
Vesuvius 0.61 % 26.68 %
Percentages shown for contributions and performances are based on Euros.

Bottom 5 contribution (2020-04-30)

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  Contribution i Performance i
Fabege AB -0.13 % -5.10 %
SSP Group -0.09 % -7.07 %
Arcadis -0.03 % -2.17 %
Freni Brembo -0.02 % -5.36 %
Saf Holland -0.01 % -1.35 %
Percentages shown for contributions and performances are based on Euros.

Geographic allocation (2020-04-30)

35.1 %
United Kingdom
13.3 %
Netherlands
7.5 %
Sweden
7.5 %
Germany
5.0 %
Norway
4.4 %
Luxembourg
3.5 %
Spain
3.2 %
Finland
3.1 %
Austria
3.1 %
Ireland
2.8 %
France
2.6 %
Belgium
1.9 %
Italy
1.7 %
Denmark
2.7 %
Other
2.5 %
Cash
Total
100 %

Top 10 holdings (2020-04-30)

3.3 %
Hikma Pharmaceuticals
3.2 %
Huhtamaki
3.1 %
BAWAG Group
3.1 %
Hibernia REIT
3.1 %
Dialog Semiconductor
3.0 %
BE Semiconductor Industries
3.0 %
Bunzl
2.9 %
Coats
2.9 %
ASR Nederland
2.9 %
Bravida
Total
30.5 %

Sector allocation (2020-04-30)

26.7 %
Industrial Goods & Services
11.7 %
Technology
9.6 %
Food & Beverage
6.4 %
Health Care
6.0 %
Banks
5.6 %
Construction & Materials
5.4 %
Insurance
4.9 %
England
4.0 %
Oil & Gas
3.8 %
Retail
3.1 %
Ireland
2.7 %
Financial Services
2.6 %
Sweden
7.5 %
Overig
Total
100 %
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.75 %
Service fee i
0.20 %
Taxe d'abonnement i
0.05 %
Expected ongoing charges i
1.00 %

Other costs

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Downward swing factor i
0.20 %
As of 2 March 2020 the swing factor has been adjusted from 0.45%/0.25% to 0.45%/0.20%.
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. 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
BN i
Investor type
Private
Distributing
Yes
Benchmark i
MSCI Europe Small Cap Total Return Index
Investment category
Small-caps
Universum
Sustainable European Small- & Mid-caps
Inception date
2013-11-07
Domicile
Luxembourg
May be offered to all investors in
Belgium, Luxembourg, 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„¢

Tradability

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Minimum subscription
Initial subscription € 1
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU0927663905
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

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 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

The investment objective of Kempen (Lux) Sustainable European Small-cap Fund is to offer investors the opportunity to invest in an actively and professionally managed portfolio of smaller listed European companies, while at the same time complying with strict exclusion and sustainability criteria.

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We strive to invest in a portfolio of companies that has a carbon intensity well below the benchmark. Furthermore, we engage with the most carbon intense companies in our portfolio in order to improve disclosure and policies that should contribute to a reduction in carbon intensity.

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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 European Sustainable Small-cap Fund excludes all companies on the KCM Exclusion- or Avoidance list.

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Companies that ‘Fail’ or are on ‘Watchlist’ marked against the criteria of the United Nations Global Compact are excluded.

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We determine a company’s ESG score (1-5) and exclude companies with a score of 1. Companies with a score of 2 are excluded on a comply or explain basis.

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The Sustainable European Small-cap 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) SUSTAINABLE EUROPEAN SMALL-CAP FUND

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KEMPEN CRITERIA

ADDITIONAL SUSTAINABILITY CRITERIA

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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

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x    Alcohol

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V

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x    Animal Welfare & GMO

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V

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x    Gambling

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V

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x    Power Generation Nuclear

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V

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x    Power Generation Carbon Intensive

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V

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x    Thermal Coal

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x    (Un)conventional Oil & Gas Extraction

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V

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x    Weaponry

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ESG integration

In the investment process we assess the ESG profile of a company. 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 lower score (1-5) requires a higher return as used in our Discounted Cash Flow (DCF) models. 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 Sustainable European Small-cap Fund and discusses the findings with the portfolio managers.

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Active ownership: Engagement

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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In the first half of 2019, we engaged with 13 companies on strategic, environmental, social and governance issues.

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Active ownership: Voting

Exercising our voting rights is also an essential part of our responsible investment philosophy. ISS provides us with voting recommendations based on our own voting and governance policy. Items are further analyzed on a case by case basis.

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Often, we inform the company about our voting intention ahead of the meeting and, where there is a recommendation to vote against management, we ask the company to clarify their viewpoints. After careful analysis, we form our own opinion and vote accordingly.

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Our full voting records are available here.

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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 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.

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ESG integration in the investment process
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disclaimer
Kempen (Lux) Sustainable European Small-cap 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).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. 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 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/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. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.