Institutional investors have been hit by Kempen Capital Management’s decision to cease offering four passive investment funds, and to fully focus on active investments.
Last week, the Netherlands-based asset manager announced that it would shut its fundamental index strategy, in which the economic power of a country or company rather than its market value determines the composition of the index.
In the asset manager’s opinion, this smart beta approach – which applies to three property equity funds and a government bond fund – was passive, and no longer fitted with its aim to focus fully on active investment strategies.
In a letter to investors, Kempen added that it expected the invested assets in the four funds – currently €395m – would decrease, making it difficult to keep offering them at attractive prices.
Assets of the property fund only available to Dutch institutional investors totalled almost €170m last week, while its Luxembourg-domiciled property fund had €16m of institutional money.
Kempen declined to provide details about which pension funds were involved.
Institutional investors have been divesting tens of millions euros from Kempen’s government bond fund since last summer.
The manager said that it was seeking a solution together with remaining investors to allow them to remain with Kempen, albeit in an active strategy.
However, investors wanting to stick to index investing must find another provider.
The asset manager said that the assets invested in the funds would be paid out over the next four months.