The Luxembourg Fund Labeling Agency (LuxFLAG), an organization that certifies whether investment vehicles actually invest in the microfinance sector, has released a study analyzing 2009 and early-2010 trends in the microfinance industry as well as the performance of microfinance investment vehicles (MIVs) that were carrying the LuxFLAG certification label during the period covered in the study.
The study indicated that microfinance institutions (MFIs) and MIVs, widely thought to be de-correlated from capital markets, nonetheless felt the effects of the recent economic crisis. LuxFLAG-labeled MIVs in Central America and Eastern and Central Europe were particularly hard hit. But 2010 also brought positive signs: liquidity levels of all labeled MIVs declined, and monthly returns are expected to increase according to research conducted by Symbiotics, a microfinance investment intermediary based in Switzerland.
The study also indicated that the microfinance industry is reshaping in the following ways: (1) MFIs are strengthening their risk management systems, investing in customer relations and developing new products, while (2) MIVs are seeking new ways to invest in untapped, and potentially riskier, regions such as Africa [1].
By John Howard-Smith, Research Associate
About Luxembourg Fund Labeling Agency (LuxFLAG): Luxembourg Fund Labeling Agency (LuxFLAG) was established in 2006 to promote the raising of capital for microfinance by acting as a recognizable symbol of reputable microfinance investment vehicles (MIVs). It certifies MIVs based on their direct or indirect investment in the microfinance sector. LuxFLAG only certifies MIVs registered in nations with financial supervision on par with countries in the European Union.
[1] LuxFLAG: “Report on the Performance of LuxFLAG Labelled MIVs”, http://www.luxflag.org/documents/brochures/LuxFLAG_Performance_Study_Nov2010_final_version.pdf
MicroCapita.org story, October 19, 2010: “MICROCAPITAL BRIEF: Luxembourg Find Labeling Agency (LuxFLAG) Grants Label to Microfinance Investment Vehicles (MIVs) KCD-Mikrofinanzfonds I Global, KCD Mikrofinanz Fonds II Latin America, Finethic Microfinance SCA, Triodos SICAV II and Wallberg Global Microfinance Fund”, https://www.microcapital.org/microcapital-brief-luxembourg-find-labeling-agency-luxflag-grants-label-to-microfinance-investment-vehicles-mivs-kcd-mikrofinanzfonds-i-global-kcd-mikrofinanz-fonds-ii-latin-america-finethic-mi/
MicroCapital’s Microfinance Universe profile: Luxembourg Fund Labeling Agency (LuxFLAG), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=LuxFLAG
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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