The Luxembourg Fund Labeling Agency (Luxflag), created in 2006 to grant distinctive labels to microfinance investment funds, has granted its first labels to three Microfinance investment vehicles.
The Luxflag label was created to promote the raising of capital for microfinance by awarding a distinctive label to investment funds and other vehicles which qualify as eligible Microfinance Investment Vehicles (MIVs). The label is open to eligible MIVs wherever they are domiciled.
Microfinance can be defined as the supply of loans, saving, insurance, transfer services and other financial products to poor and low-income clients excluded from the traditional banking system. In general microfinance institutions in which MIVs invest will have an average loan size of less than €5,000.
The label aims to reassure investors that the fund will actually invest directly or indirectly in the microfinance sector. The label will also serve to facilitate fund distribution. Microfinance funds must show that they meet regulatory transparency and investor protection standards when applying for the Label.
The Luxflag Microfinance Label does not, however, guarantee performance or constitute a recommendation to invest.
The first three institutions to have been granted the label were issued it in late January.
The Dexia Micro-Credit Fund is the oldest microfinance fund in Luxembourg. It is promoted by Dexia Banque International in Luxembourg with RBC-Dexia as custodian of the fund and Dexia Asset Management as manager of the fund for liquidities. The microfinance portfolio manager will be Blue Orchard, a Geneva based investment manager specialising in microfinance.
The European Fund for Southeast Europe (EFSE) is part of a public private partnership with KfW in Germany, and is one of the three largest MFVs in the world. Oppenheim Pramerica Asset Management in Luxembourg will be fund manager and Bankakademie Frankfurt will be investment adviser. Citigroup Luxembourg will act as fund administrator and custodian.
The responsAbility Global Microfinance Fund is managed by the Credit Suisse Microfinance Fund Management Company, Luxembourg and Credit Suisse is custodian of the fund. The investment adviser will be responsAbility, a Zurich based company that specialises in social investments in developing countries.