MICROFINANCE PAPER WRAP-UP: Symbiotics 2014 MIV [Microfinance Investment Vehicle] Survey Report: Market Data and Peer Group Analysis

“Symbiotics 2014 MIV [Microfinance Investment Vehicle] Survey Report: Market Data and Peer Group Analysis;” published by Symbiotics Group; 2014; 36 pages; available at http://www.symbioticsgroup.com/media/72461/symbiotics-2014-symbiotics-miv-survey-report.pdf

Symbiotics, a Switzerland-based investment company that is “specialized in emerging, sustainable and inclusive finance”, recently performed a survey of microfinance investment vehicles (MIVs) regarding their financial and social performance during 2013. The report defines MIVs as “independent investment entities with more than 50 percent of their non-cash assets invested in microfinance and are open to more than one investor.” The report is based on responses given by 80 fixed-income, mixed and equity funds, representing 94 percent of the global MIV market. As of December 31, 2013, the respondents managed a total of USD 9.3 billion in assets.

The first section of the survey reports an annual growth rate of 16.4 percent in total assets and an increase of 17 percent in aggregate microfinance portfolio from 2012 to 2013. In 2013, “the market for asset managers became more concentrated” with approximately 40 percent of the total assets managed by the top three MIVs. The microfinance portfolio of MIVs also was regionally concentrated, with 40 percent of funds being invested in Eastern Europe and Central Asia and 30 percent in Latin America and the Caribbean. The asset composition of MIVs was stable, with investments primarily made through direct debt. In 2013, the average size of direct debt investments increased to USD 1.9 million from USD 1.8 million in 2012. The average number of investees also increased from 29 in 2012 to 34 in 2013. The simple average yield of MIVs decreased to 6.9 percent in 2013 from 7.7 percent in 2012, while the market-value weighted average yield of MIVs decreased to 4.8 percent in 2013 from 5.2 percent in 2012. The “social outreach” of MIVs intensified, with investments reaching 201,900 borrowers in 2013 compared to 165,200 borrowers reached in 2012. The average loan size of microfinance institutions (MFIs) in MIV’s portfolios also decreased from USD 2,069 in 2012 to USD 1,787 in 2013.

The second section of the survey provides a peer-group analysis. Sixty percent of the 80 MIVs included in the survey are fixed-income funds, mixed funds represent 21 percent and equity funds comprise 19 percent. In 2013, fixed-income funds and mixed funds experienced stable growth of 16 percent and 19 percent respectively. Equity funds grew by 12 percent in 2013, compared to their growth rate of 66 percent in 2012. In 2013, 76 percent of the aggregate portfolio of MIVs was invested in microfinance, 8 percent was invested in small and medium-sized enterprises (SMEs) and fair trade investments, and the balance of 16 percent was held in cash and other assets. During the year, equity funds “boosted investments in SMEs, Fair Trade and other market instruments” from 5.1 percent in 2012, but decreased their microfinance portfolios by 5 percent. The total portfolio of mixed funds grew by 25 percent in 2013 while the aggregate portfolio of equity funds decreased by 26 percent during the same year. While the majority of the value of MIV investments was placed in Eastern Europe and Central Asia, equity funds decreased their new participation in this geographical area to 3 percent in 2013 from 38 percent in 2012 and boosted their activity in South Asia to 66 percent in 2013 from 18 percent in 2012.

On the funding side, institutional investors supplied 52 percent of MIV funding. Public-sector institutions committed 30 percent of funding, retail investors funded 11 percent and high net-worth individuals accounted for the balance of 7 percent. The public sector directed most of its funding to fixed-income funds, while retail investors primarily supported mixed funds and high net-worth individuals invested mostly in equity funds. The average total expense ratio (TER) of MIV investors was 3.2 percent, with the TER of fixed-income funds being the lowest. Annual returns of unleveraged MIVs ranged from 2.43 percent to 22.67 percent except for the returns of euro share classes of fixed-income funds, which ranged from 1.61 percent to 1.69 percent. For leveraged MIVs, euro-denominated equity tranches performed better than US-dollar equity tranches, while the opposite was observed for fixed-income notes.

The authors conclude by reporting on the environmental, social and governance (ESG) standards of MIVs. The number of MIVs endorsing the Smart Campaign Client Protection Principles, a set of standards that govern the practices of microfinance businesses in an effort to protect clients from harm, decreased to 96 percent in 2013 from 97 percent in 2012. Eighty-three percent of MIVs integrated environmental issues in their investment decisions, and 84 percent of MIVs reported compliance with anti-corruption policies.

By Alíz Crowley, Research Associate

About Symbiotics Group

Founded in 2004, Switzerland-based Symbiotics provides for-profit investment intermediary and business services to investors in and practitioners of micro- and small enterprise (MSE) development. As of 2014, through its work with approximately 28 investment funds (MIVs) and a dozen institutional investors, Symbiotics facilitated the provision of USD 811 million in capital to about 803,000 micro-, small and medium-sized enterprises (MSMEs) via 150 financial institutions. The company also offers Syminvest, a microfinance investment information platform designed to increase transparency and enhance investment capacity in the industry by monitoring regional markets as well as individual institutions.

Sources and Additional Resources

Symbiotics Group, Symbiotics 2014 MIV [Microfinance Investment Vehicle]Survey Report: Market Data and Peer Group Analysis

MicroCapital, August 7, 2014, Symbiotics Issues $30m in Bonds to MicroCred China; India’s Arohan, Grameen Koota, Annapura Microfinance

MicroCapital, April 28, 2014, Luxembourg Fund Labeling Agency (LuxFLAG) Provides Environmental Label to Parvest Green Tigers Fund; Microfinance Label to EU Microfinance Platform, Symbiotics (SICAV) SEB Microfinance Fund

MicroCapital, July 29, 2013, Symbiotics 2013 MIV Survey Report: Market Data and Peer Group Analysis

MicroCapital Universe Profile: Symbiotics Group

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