The Fundo capital gain
Since 2006, we are a committed team of asset managers working closely with leading microfinance advisors. Our objective: to generate attractive returns for customers through Finethic products that have an economic and social impact in more than 40 countries.
Born from the failure of international humanitarian initiatives, microfinance has established itself as an alternative development strategy. It is based on the idea that it is more effective to finance entrepreneurial projects to sustainably improve people’s lives in the poorest countries than simply to support them without promoting value creation. Through two sub-funds of a Luxembourg fund, Finethic refinances microcredit institutions, giving meaning to the invested assets.
The Finethic Microfinance sub-fund does not lend directly to individuals but to local microfinance institutions and banks that independently manage their own client portfolios. Since inception in 2006, Finethic Microfinance has provided loans to more than 180 of these institutions in some 40 countries for a total amount exceeding $700 million. Finethic Microfinance offers investors a regular and predictable performance. Extensive diversification, absence of currency risk and limited investments in debt have enabled sustained long-term profitability to be achieved.
Finethic Microfinance II
One of the major challenges in emerging countries remains the limited share of small and medium-sized enterprises (SMEs) in the economy. While in developed countries their share represents more than 50% of GDP and more than 60% of employment, SMEs represent respectively less than a fifth (17%) and less than a third (30%) in these low-income countries. This gap is also commonly known as “The Missing Middle” in sustainable finance.
In addition to the lack of regulatory, policy and infrastructure frameworks, one of the main reasons for this gap is still access to capital. Investments in SMEs in emerging countries offer an increasing opportunity to contribute to the strengthening of financial intermediation and the promotion of investment policies that promote a more equitable distribution of the economic growth of the countries concerned.
The Finethic Microfinance II sub-fund was launched based on the same principles as the first sub-fund, with an investment universe including structures emanating from non-banks and having evolved towards organizations with banking status. These specialized banks, generally with customer savings, have a broader financial activity, offering loans to SMEs, large companies, for education, consumption and real estate, in addition to microloans.
Following strong demand from institutional investors and pension funds for risk-adjusted responsible investments with attractive returns, the Finethic Microfinance II sub-fund was launched at the end of March 2016. Based on broad diversification, systematic currency hedging and purely debt-based investments, Finethic Microfinance II targets a sustained long-term return.