The Luxembourg Fund Labeling Agency (LuxFLAG), a microfinance institution vehicle (MIV) certification organization, has recently granted the LuxFLAG Microfinance Label, which reassures investors that MIVs actually invest in the sector, to four MIVs for the first time: Microfinance Enhancement Facility SA SICAV-SIF, Selectum SICAV-SIF, Etimos Fund SICAV-SIF and Dual Return Fund SICAV-SIF Vision Microfinance Local Currency. SICAV-SIF is an acronym indicating onshore Luxembourg investment fund that takes a collective investment approach and is structured as an open-ended legal entity with variable capital. From January to September 2011, LuxFLAG granted seven new microfinance labels and renewed 13, bringing the total number of MIVs labelled by LuxFLAG to 20, with total assets under management amounting to approximately USD 2.9 billion.
In order to obtain a the LuxFLAG Microfinance Label, an MIV is required to comply with a set of criteria that includes microfinance investments corresponding to at least 50 percent of the MIV’s total assets, having at least 25 percent of its portfolio invested in MFIs rated by a microfinance rating agency recognised by LuxFLAG and regularly reporting audited financial and other information to investors.
By Kristha Abores, Research Associate
About Luxembourg Fund Labeling Agency:
The 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 MIVs. It certifies MIVs based on their direct or indirect investment in the microfinance sector. LuxFLAG only certifies MIVs domiciled located in nations with financial supervision on par with countries in the European Union. As of September 2011, 20 MIVs hold current LuxFLAG labels.
About Microfinance Enhancement Facility (MEF):
Created in February 2009 by International Finance Corporation (IFC), the private investment arm of the World Bank Group, and the German development bank KfW Entwicklungsbank (KfW), the Microfinance Enhancement Facility (MEF) was designed to support the growth of microfinance institutions by providing them with refinancing liquidity. Co-managed by BlueOrchard Finance SA, Cyrano Management SA and responsibility Social Investments AG, the fund has a target size of USD 500 million. As of June 2011, MEF reported total assets of USD 163 million and a microfinance investment portfolio of USD 130 million.
About Selectum SICAV SIF:
Launched in October 2010, the Selectum SICAV SIF mainly invests in microfinance institutions (MFIs) targeting micro-, small and medium-sized enterprises. SICAV SIF is an acronym indicating onshore Luxembourg investment fund that takes a collective investment approach and is structured as an open-ended legal entity with variable capital. It aims to encourage the adoption of the double-bottom-line principle of stable financial return and positive social impact. Selectum is managed by Banque de Luxembourg Investments SA. Selectum does not report to the Microfinance Information Exchange (MIX), the US-based nonprofit data provider and financial information on the fund is not otherwise available.
About Etimos Fund:
Launched in January 2011, the Etimos Fund aims to offer socially responsible investors financially and socially sound investments managed by Italian investment manager Consorzio Etimos to contribute to the sustainable development of emerging market economies in micro- and small enterprises and producers. Its first sub-fund, the Etimos Fund – Global Microfinance Debt, will invest 90 percent of its assets in debt instruments primarily earmarked for microfinance institutions. Financial information on the Etimos Fund is not available.
About Dual Return Vision Microfinance Fund:
The Dual Return Fund is a sub-fund of Vision Microfinance, both of which were created in 2006 by Absolute Portfolio Management GmbH, an Austrian investment company specializing in microfinance. The Vision Microfinance Local Currency fund disburses local-currency loans directly to microfinance institutions (MFIs). In August 2011, the fund’s total microfinance investment portfolio experienced an annualized yield of 11 percent and an investment level of approximately 85 percent. As of the same month, the fund reported a total fund volume of EUR 21.2 million (USD 29 million) and loans outstanding to 27 MFIs in 18 emerging markets. In April 2011, its annual label was renewed by the Luxembourg Fund Labeling Agency (LuxFLAG), an organization that investigates whether investment vehicles actually support the microfinance sector.
Sources and Additional Resources:
[1] LuxFlag Press Relese: “4 new Microfinance Investment Vehicles (MIVs) obtain the LuxFLAG Microfinance Label ? 6 MIVs choose to renew their LuxFLAG Microfinance Label”, http://www.luxflag.org/documents/press_releases/2011/LuxFLAG_Press_Release_Sept2011_Labels_EN.pdf
LuxFlag: “Criteria & Procedure”, http://www.luxflag.org/MIV_listingProcedure.htm
LuxFLAG: “LuxFLAG list of MIVs” http://www.luxflag.org/MIV_fundsListing.htm
MicroCapital.org article, May 30, 2011, “MICROCAPITAL BRIEF: LuxFLAG Renews Label for MIVs From Absolute, BlueOrchard, EFSE, Finethic, Horus, KCD, ResponsAbility, Triodos, Wallberg”, https://www.microcapital.org/microcapital-brief-luxflag-renews-label-for-…
MicroCapital.org article, January 18, 2011, “MICROCAPITAL BRIEF: Luxembourg Fund Labeling Agency (LuxFLAG) Releases Study Analyzing Microfinance Industry, Performance of Microfinance Investment Vehicles (MIVs)”, https://www.microcapital.org/microcapital-brief-luxembourg-fund-labeling-…
MicroCapital Universe Profile: LuxFLAG, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=LuxFLAG
MicroCapital Universe Profile: Microfinance Enhancement Facility, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Enhancement+Facility+%28MEF%29
MicroCapital Universe Profile: Selectum SICAV SIF, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Selectum+SICAV+SIF
MicroCapital Universe Profile: Etimos Fund, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Etimos+Fund
MicroCapital Universe Profile: Dual Return Vision Microfinance Fund, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=DUA…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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