The Performance of LuxFLAG‐Labelled MIVs During the Financial Crisis
Luxembourg, December, 14 2009 -
LuxFLAG has carried out a report to determine the effect of the recent financial crisis on the Microfinance Investment Vehicles (MIVs) labelled by LuxFLAG by tracking the evolution of these MIVs over LuxFLAG’s life (June 2006 to June 2009).
The main findings of the study are:
- Since LuxFLAG’s creation, MIVs have experienced solid growth both in number and assets under management. Despite some growth deceleration during the financial crisis, the consistent rise in MIVs’ total assets, has demonstrated the extraordinary expansion and continued investor interest in this sector;
- The results of the study support the contention that MIVs remain largely de-correlated from other sectors of the capital markets and provide an efficient diversification tool to the investor. Although demand for funding from the underlying MFIs slowed down, leading to a decrease in the MicrofinancePortfolios and a increase in cash positions, the LuxFLAG labelled MIVs have demonstrated resilience, posting relatively lower but still positive monthly returns during the worst global financial crisis since the 1920s.
- LuxFLAG labelled MIVs did not face major redemptions during the crisis. Investors remained committed to the labelled MFIs, reinforcing the assumption that Microfinanceinvestors are more willing to take a longer term and holistic approach.
LuxFLAG’s directors and management believe that the financial crisis has highlighted the fundamental role of LuxFLAG in promoting greater transparency towards investors and confirmed that the LuxFLAG Microfinance Label is a powerful tool for decision-makers who wish to integrate social considerations into their investment policy and decision-making processes, with a view to creating a more responsible Microfinance sector.