Microfinance Funds: 10 Years of Research & Practice

A review and analysis of CGAP & Symbiotics’ Microfinance Investment Vehicles Surveys

This white paper, co-written by Symbiotics and CGAP, reflects back on 10 years of data and analysis on microfinance investment vehicles (MIVs), shedding light on their progress during the period 2006-2015. It not only allows for a greater understanding of the market’s evolution and the changes occurring in funds’ portfolios, investor markets and their social outreach but also contextualizes MIVs' future outlook in contributing to a greater degree of financial inclusion in the developing world.

High-level findings from this study are:

  • Since December 2006, assets under management (AUM) of MIVs have grown more than five-fold, rising from USD 2 billion to USD 11 billion2 by the end of 2015; 
  • The regions of Eastern Europe & Central Asia (EECA) as well as Latin America & the Caribbean (LAC), remained the primary MIV markets in 2015;
  • Concentration indicators have been decreasing slightly for all funds, with the rate of exposure to the largest region decreasing by only 10 percentage points since 2006;
  • By the end of 2015, institutional investors were worth a total of USD 5 billion, 47% of total funding, compared to USD 500 million back in 2006 – an increase which represents a Compounded Annual Growth Rate (CAGR) of 27%; 
  • More than two-thirds of vehicles are domiciled in Western Europe (mainly Luxembourg and the Netherlands), which currently accounts for nearly 90% of the MIV universe in terms of total assets (TA);
  • Switzerland and the Netherlands remain the primary locations for MIV managers, while Germany and the United States have switched places, with the latter moving up to third place;
  • The majority of microfinance funds were launched during the 2005–2010 period;
  • Yields in USD on MIVs’ direct microfinance portfolios declined slightly, before stabilizing at around 7% from 2011 onwards on a weighted average basis;
  • The cost structure of MIVs has been relatively stable since 2007, the overall trend being led by the cost levels of Fixed-Income Funds, which account for a large share of total market size;
  • Return spreads above Libor three-month USD and EUR have averaged 2% over the past 10 years;
  • The total number of active borrowers financed by MIVs through their portfolio investees has gradually increased, from 520,000 in 2006 to nearly 24 million at the end of 2015.

About this Publication

By Scola, B., Soursourian, M., Dominicé, R., Parashkevova, M. , Narayanan, R.