microfinance investors

The socially responsible investment (SRI) market is estimated at about 3 trillion dollars worldwide. The share of SRI funds allocated to emerging markets is estimated at about 1%. Ethical funds, sustainable investments and socially responsible ventures are growing rapidly into the agenda of investors and fund managers alike.

Globalization and geopolitical events also are increasingly driving capital towards the periphery, opening up new opportunities from previously unattended populations. Emerging markets funds, often theme oriented (sustainable development, environment, water, renewable energy, housing, small enterprise, etc.) are becoming every day more apparent. Whether socially responsible or not, today investors are increasingly looking into low volatility opportunities and/ or segments of the market uncorrelated with mainstream global benchmarks.

Absolute returns, capital guarantees and value for the money are becoming just as important as relative performance. Microfinance fits all three of these new global trends in the financial arena. As a sequence, the past few years have witnessed the emergence of new microfinance investment vehicles attracting SRI and capital market money. In return, they are bringing yet more professional skills into the industry, increasingly commercializing and rationalizing the value chain, pressuring investment intermediaries into further transparency, risk management tools and competitive market pricing.