In this white paper, MicroRate addresses the industry’s need for an objective set of criteria to classify the maturity of a microfinance institution (“MFI”). Historically, the microfinance industry referenced a system of three or four “tiers” to differentiate between MFI types.  However, previous tier definitions – often vague or based only on one indicator such as size – failed to adequately capture an MFI’s level of institutional development.

The system proposed is based on a three-tier structure that applies three simple, objective indicators that, together, act as proxies for MFI maturity. The three indicators are sustainability (return on assets, RoA), size (total assets in U.S. dollars) and transparency (level of regulation/reporting).

 Read this white paper

In this report, The State of Microfinance Investment 2012: MicroRate’s 7th annual survey and analysis of MIVs, MicroRate finds that microfinance investment vehicles (MIVs) have settled into a lower level of growth.  The key findings of the report include:

• MIV total asset growth settled into a “new normal” at 11% during 2011 (2010: 12%, 2012 forecast: 14%).
• Record year for investor redemptions and fund maturities, however growth at existing and new funds resulted in a net inflow.
• Latin America had the largest share of growth, but the pace of growth was faster in East Asia and the Pacific and Africa.
• Continuing shift from debt to equity; increase in non-microfinance investment (e.g. housing, fair trade).
• Institutional investors’ demands show increasing importance of financial performance.

 Read the report

 Read the press release

According to Sebastian von Stauffenberg, CEO of MicroRate, “the findings from this year’s study show how the microfinance investment market is maturing and settling into a more sustainable rate of growth.  This growth, in spite of record-setting redemptions, shows the resilience of these funds within the impact investment asset class.”

This report, which is MicroRate’s 7th annual survey of microfinance investment vehicles (MIVs), is based on interviews with MIV managers and a survey of the 102 active MIVs with total assets under management estimated at $7.5 billion as of December 2011.  Of this universe, MicroRate received data on 85 funds, covering 93% of global MIV assets.

The key findings of the report include:

• MIV total asset growth settled into a “new normal” at 11% during 2011 (2010: 12%, 2012 forecast: 14%).
• Record year for investor redemptions and fund maturities, however growth at existing and new funds resulted in a net inflow.
• Liquidity levels stabilized as excess cash from 2009 was reinvested in 2010.
• MFI demand returned, though with large regional and country differences.
• Latin America had the largest share of growth, but the pace of growth was faster in East Asia and the Pacific and Africa.
• Continuing shift from debt to equity; increase in non-microfinance investment (e.g. housing, fair trade).
• Institutional investors’ demands show increasing importance of financial performance.

The State of Microfinance Investment 2012 report was sponsored by Citi Microfinance, the European Investment Bank, LuxFLAG, and the Luxembourg government.

 Read the report

 Download the press release

With the support of the IDB- FOMIN, CAF, and Calmeadow, MicroRate produced the study “Centrales de Riesgo Públicas y Burós de Crédito y el Sector Microfinanciero en América Latina” (“Public Credit Registries, Credit Bureaus, and the Microfinance Sector in Latin America”).  This report emphasizes how public credit registries and credit bureaus are critical tools for healthy growth in the microfinance sector.  The study concludes that these sources of credit information are even more important when there is risk of overindebtedness.  In the majority of the countries evaluated in this study, it would be relatively easy to improve the effectiveness of credit bureaus through changes to the legal framework and regulation.

Read the report (in English)

Read the report (in Spanish)

This paper contains information on the total asset sizes of microfinance institutions and microfinance funds, the diversity of funds, as well as the important role that these funds play in providing capital to increase financial access globally.

Through this research, Luminis seeks to educate investors about microfinance investment options, promoting transparency and informed investment decisions

 Read Microfinance Investment: A Primer

“We started MicroRate because already in 1997 it was apparent that public investment could not finance the immense demand for microcredit.  Only private capital markets would be large enough,” reflected Damian von Stauffenberg, founder and chairman of MicroRate.  “Capital markets, however, will not pay attention to a sector that lacks transparency.”

After identifying the need for transparency, MicroRate began to pilot microfinance institution (MFI) ratings in 1996.  In 1997, MicroRate was formally established with the mission “to be the leading microfinance information services provider. MicroRate will accomplish this by maintaining a high level of quality along with independence, integrity, and an unyielding commitment to the poor.”

Since its founding, MicroRate has performed over 600 MFI evaluations including Credit Ratings, Social Ratings, Institutional Evaluations and its original product, the Performance Rating.  MicroRate’s operations expanded to open field offices in Lima, Peru and Casablanca, Morocco, outside of its main office located in the Washington, D.C. metropolitan area.

In addition to MFI evaluations, MicroRate has published industry-leading research including:

• Role Reversal Revisited: Are public development institutions still crowding out private funders?
• The State of Microfinance Investment 2011: MicroRate’s 6th annual survey and analysis on microfinance investment vehicles
• Cautious Resilience: The Impact of the Global Financial Crisis on Latin American and Caribbean Microfinance Institutions
• Technical Guide: Performance Indicators for Microfinance Institutions (3^rd Edition)

MicroRate also pioneered evaluations of microfinance funds, having performed the first public evaluation of a microfinance CDO and over 60 fund evaluations.  In 2010, MicroRate launched its Luminis service to provide data and analysis on microfinance funds.  Prior to Luminis, investors in these funds had no access to comparable information or benchmarking metrics for this new asset class.

“The development of Luminis is just one example of how MicroRate strives to provide relevant services to help increase access and awareness of microfinance investment options,” commented MicroRate CEO, Sebastian von Stauffenberg. “MicroRate’s vision from the beginning has been ‘to promote the flow of funds from capital markets to microfinance by increasing transparency and growth in the global microfinance community.’  We will continue to promote this vision and to meet the needs of investors and MIVs, as well as MFIs who seek daily to promote inclusive finance for the underserved.”

Download this press release

Damian von Stauffenberg was interviewed by the Association of the Luxembourg Fund Industry (ALFI) on a variety of topics including negative publicity on microfinance, how microfinance investment changed during and after the global financial crisis, and on global trends in microfinance and on microfinance funds (May 2012).

LUXEMBOURG, May 10, 2012- MicroRate, with the support of LuxFLAG and the Grand Duchy of Luxembourg, is announcing the hard launch of Luminis™ the first web-based, analytical platform on microfinance funds.  The announcement was made today at the Association of the Luxembourg Fund Industry’s Responsible Investing Conference.

The success of microfinance as a socially responsible investment option led to a dramatic increase in the number of funds that invest globally in microfinance institutions. Luminis is the single resource that provides investors with objective data and analysis, enabling them to identify, compare, evaluate, and monitor microfinance funds.

The Luminis platform contains fund profiles and reports along with fund search tools and industry research to help investors understand microfinance investment. To evaluate these impact investments, the Luminis team analyzes performance, risk, social, and management (PRSM™) dimensions of each fund.  This data is presented in detailed fund profiles and the analysis through in-depth fund reports.

Luminis provides information on 80 microfinance funds with detailed PRSM data on 23 of those funds.

The Luminis List

1. Alterfin
2. ASN-Novib Fund (Triple Jump)
3. Dexia Micro-Credit Fund – BlueOrchard Debt Sub-Fund
4. Dual Return Fund – Vision Microfinance Local Currency Sub Fund
5. Dual Return Fund – Vision Microfinance Sub Fund
6. Dutch Microfinance Fund (Annexum)
7. Etimos Fund Global Microfinance Debt
8. Gawa Microfinance Fund I (Treetops Capital)
9. Impulse Microfinance Investment Fund (Incofin)
10. Incofin cvso (Incofin)
11. Locfund L.P. (Bolivian Investment Management)
12. Luxembourg Microfinance and Development Fund – Social Venture Capital Sub-Fund (ADA)
13. MicroVest I, LP
14. MicroVest Short Duration Fund, LP
15. MicroVest+ Plus, LP
16. responsAbility Global Microfinance Fund FCP
17. responsAbility SICAV (Lux) Microfinance Leaders Fund Sub-Fund
18. responsAbility SICAV (Lux) Mikrofinanz-Fonds Sub-Fund
19. Rural Impulse Fund (Incofin)
20. Rural Impulse Fund II (Incofin)
21. SNS Institutional Microfinance Fund
22. SNS Institutional Microfinance Fund II
23. Triodos SICAV II-Triodos Microfinance Fund

“Investors will now be able to evaluate microfinance funds as a part of their larger impact investing strategy,” stated Sebastian von Stauffenberg, CEO of MicroRate. “We are excited to see how Luminis will facilitate investment into microfinance, ultimately improving financial access for billions of micro-entrepreneurs around the world.”

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About Luminis (www.luminismicrofinance.com)

Luminis answers investors’ demand for greater transparency and objective analysis of microfinance investment vehicles (MIVs). Luminis is a web-based analytical service of MicroRate that provides professional investors and researchers with the necessary tools to identify, assess, and monitor MIVs that meet their individual requirements.

About MicroRate (www.microrate.com)

MicroRate is the first microfinance rating agency dedicated to evaluating performance and risk in microfinance institutions (MFIs) and microfinance funds, also known as microfinance investment vehicles (MIVs). As the oldest and most well-respected organization of its kind, MicroRate has conducted over 600 ratings of 200+ MFIs throughout Latin America, Africa, Europe, and Central Asia.  MicroRate is a leading social rater and has also become the largest MIV evaluator in the industry.

About LuxFLAG (www.luxflag.org)

The LUXEMBOURG FUND LABELLING AGENCY (LuxFLAG) is an independent, non-profit-making association created in Luxembourg in July 2006. LuxFLAG supports the financing of sustainable development by providing clarity for investors through awarding its Labels to eligible Microfinance Investment Vehicles (MIVs) and Environment-related Investment Vehicles (EIVs). Its objective is to reassure investors that the labelled investment fund invests most of its assets, directly or indirectly, in the microfinance or environment sectors. The MIV/EIV may be domiciled in any jurisdiction that is subject to a level of national supervision equivalent to that available in European Union countries.

“We would like to recognize those funds that have gone beyond basic reporting and are setting the new standard of transparency.  All of these funds should be considered pioneers and torchbearers for microfinance transparency,” stated Sebastian von Stauffenberg, MicroRate’s CEO.  “We look forward to seeing their example lead other microfinance funds, and ultimately new investors, into microfinance.” The Luminis List represents 13 fund managers and 38% of the total assets of microfinance investment funds.  The Luminis PRSM™ methodology assesses the four key dimensions of each fund: Performance, Risk, Social, and Management (PRSM). The Luminis List will be updated on a regular basis to reflect new funds that participate in this effort.  There is no cost for the microfinance funds to be evaluated by Luminis.

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About MicroRate (www.microrate.com) MicroRate is the first microfinance rating agency dedicated to evaluating performance and risk in microfinance institutions (MFIs) and microfinance funds, also known as microfinance investment vehicles (MIVs). As the oldest and most well-respected organization of its kind, MicroRate has conducted over 600 ratings of 200+ MFIs throughout Latin America, Africa, Europe, and Central Asia.  MicroRate is a leading social rater and has also become the largest MIV evaluator in the industry. About Luminis (www.luminismicrofinance.com) Luminis answers investors’ demand for greater transparency and objective analysis of microfinance investment vehicles (MIVs). Luminis is a web-based analytical service of MicroRate that provides professional investors and researchers with the necessary tools to identify, assess, and monitor MIVs that meet their individual requirements.

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