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Symbiotics 2013 MIV Survey Report: Market Data and Peer Group Analysis

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» Posted by  in Category: Investment Funds,Trends/Challenges at 8:42 am

Published by Symbiotics Research and Advisory; 2013; 31 pages; available at:http://www.microfinancegateway.org/p/site/m//template.rc/1.9.62223

Symbiotics SA has conducted the seventh annual survey of microfinance investment vehicles (MIVs) which draws on survey responses from 84 MIVs representing approximately 93 percent of the global MIV market asset base. This paper presents an analysis of the financial and social performance of the microfinance investment industry based on data from December 2012.

The first section of the survey provides key market trends and figures. The first trend that the paper reports is that the MIV market had a positive total asset growth for the third consecutive year, recording a 19 percent increase from 2011 to 2012. The market is concentrated, however, with 44 percent of the total assets owned by the top five MIVs, which also account for 41 percent of microfinance portfolios, while the next five account for 15 percent and 17 percent, respectively. The microfinance portfolio is also regionally concentrated, with the 72 percent of funds being invested in Latin America and Eastern Europe and Central Asia. Despite the regional concentration, MIVs are experiencing the fastest growth in regions such as the Middle East and North Africa, which recorded the highest percentage growth of 167 percent from 2011 to 2012 due to a low base in absolute terms. South Asia, although having the lowest percentage growth of MIVs at 15 percent, has rebounded from the negative growth it recorded in 2011. The average loan size of microfinance institutions (MFIs) increased from USD 1,797 to USD 2,069. The average MIV portfolio size is USD 73 million, of which 78 percent is directly invested in debt.

The second section of the survey provides benchmarks and peer group analysis. For the purpose of the analysis, the MIVs are segmented into peer groups: fixed income funds, mixed funds and equity funds. Out of the peer groups, equity funds exhibited the highest growth of 66 percent in 2012, compared to 19 percent for mixed funds and 16 percent for fixed income funds. Among MIVs that took part in the survey, 75 percent of the aggregate portfolio is invested in microfinance, 9 percent is in other portfolios including small and medium-sized enterprises (SMEs) and fair trade investments and the balance of 16 percent is in cash and other assets. The study identifies the geographical concentration of MIV investments by volume as a key trend, with 72 percent of microfinance investments taking place in Latin America and Eastern Europe and Central Asia (31 percent 41 percent respectively).

On the funding side, institutional investors make up 61 percent of the MIV funding. Public-sector institutions make up 21 percent of funding, retail investors contribute 10 percent and high net worth individuals account for the balance of 7 percent. Public-sector institutions direct the majority of their funds to fixed income funds, while retail investors support mixed funds and high net worth individuals invest most of their money in equity funds. Annual returns have rebounded in 2012, ending a period of decline since 2007. The Euro returns were recorded at 4.3 percent compared to 2.5 percent in 2011 and the US dollar returns were at 3.4 percent compared to 2.4 percent.

The paper concludes by reporting environmental, social and governance (ESG) standards of the MIVs. The number of funds endorsing the Smart Campaign Client Protection Principles, a set of standards that monitor the practices and ethics of microfinance businesses to protect clients from harm, increased from 96 percent to 97 percent in 2012. On the environmental side, 73 percent of MIVs integrated environmental issues such as carbon emissions, air pollution and community displacement in their investment decisions. The number of equity funds applying anti-corruption policies in their investments decreased from 93 percent to 81 percent. Lastly, equity funds had the lowest performance in terms of ESG practices, with only 75 percent reporting their ESG standards to investors, down from 86 percent in 2011.

By Meghan Gillis, Research Associate

About Symbiotics SA

Founded in 2005, Symbiotics provides for-profit investment intermediary services to the microfinance industry as well as business services to investors in and practitioners of micro- and small enterprise (MSE) development. Symbiotics works with approximately 27 investment funds (MIVs) and a dozen institutional investors. As of 2013 it has facilitated the provision of USD 1.5 billion in capital to about 500,000 micro-, small and medium-sized enterprises (MSMEs) through 125 financial institutions in approximately 45 emerging economies. The company also offers Syminvest, a microfinance investment intelligence platform designed to increase transparency and enhance investment capacity in the industry by monitoring regional markets and specific institutions.

About CGAP (Consultative Group to Assist the Poor):

CGAP (Consultative Group to Assist the Poor) is a nonprofit policy and research center dedicated to providing financial access for poor people worldwide. CGAP was established in 1995 by approximately thirty development agencies and private foundations and is housed at the World Bank in Washington, DC, USA. Its mission is to provide “market intelligence, promote standards, develop innovative solutions and offer advisory services to governments, financial service providers, donors, and investors.”

 

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