Triodos Microfinance Fund
Investment in developing countries for a financial and social return
- Invest in microfinance institutions and banks across Africa, Asia, Latin America and Eastern Europe
- Built on our 18-year track record in financing over 100 microfinance institutions across 45 developing countries
- Investing in the Triodos Microfinance Fund is only suitable for "sophisticated" or "high net worth" investors with £10,000 or more to invest
Investing in the funds on offer from the UK branch of Triodos Bank NV is available only to UK residents. You should not interpret any information on this website as financial advice. If, after reading the information supplied, you are still unsure as to the appropriateness or suitability of investing with Triodos Bank, you should contact an independent financial advisor. The value of investments and the income derived from them may go down as well as up and you may not get back the amount originally invested.
Investments are not covered by the Dutch deposit guarantee scheme, however they may be covered by the Investor compensation scheme. For more information on these schemes please read the deposit guarantee scheme and investor compensation scheme page.
Review third quarter 2016
During the third quarter 2016, Triodos Microfinance Fund’s total assets increased from EUR 333.6 million to EUR 341.0 million. The fund’s outstanding portfolio totaled EUR 256.9 million, an increase of 7.2% compared to the previous quarter. Triodos Microfinance Fund generated a return of 0.7% (Z-cap) for the third quarter of 2016.
There are signs that the global economy has shown a modest rebound in the third quarter, following a slight rebound in the US and a modest recovery of commodity prices in the first half of the year, albeit from a very low level. The oil price was about flat in the third quarter, after recovery from weak levels in the first half of the year. The US dollar weakened 1.4% against the euro in June-September. Partly as a result of this, more Emerging Markets currencies weakened against the euro than strengthened. The Mongolian tughrik (-14.9%) and the Nigerian naira (-13.9%) weakened the most against the euro in the third quarter. On the other side of the spectrum, the Kyrgyz som continued to appreciate against the euro, by 2.8% in third quarter, making up some of the losses in 2014 and 2015. The Indian rupee and the Indonesian rupiah also strengthened, albeit modestly. Both the equity and debt portfolio showed positive results, while currency hedging had a neutral effect. The fund took provisions on positions in Nigeria. Due to pressure on the FX markets in the country, MFIs are not able to transfer funds out of the country.
The fund’s liquidity position slightly decreased compared to the previous quarter to 24.4% of net assets. Unhedged exposures decreased slightly from 20.1% to 19.5% (including equity positions).
Triodos Microfinance Fund’s portfolio developed well during the quarter: the fund added five new financial institutions to the portfolio and placed EUR 33.9 million in debt and equity investments with a total of 14 financial institutions. Nine loans were repaid for a total amount of EUR 15.6 million. The fund further reduced its exposure to the Central Asia region due to the continued challenging market circumstances in the region. The two MFIs in Azerbaijan that the fund has made provisions for, made repayments on their loans.
Bina Artha Ventura, Indonesia (debt)
Bina Artha Ventura (Bina Artha) is a credit-only institution that provides group loans to low income clients, individual loans to micro and small-sized entrepreneurs, and sanitation loans (to build proper toilets). The company serves 190,000 clients and has high focus on servicing rural areas and female population with 99% female clients and 85% rural clients. In cooperation with Allianz, Bina Artha is also providing life insurance for both the client and the spouse.
Caja Municipal de Ahorro y Credito (CMAC) Sullana, Peru (debt)
CMAC Sullana was founded by the Sullana Municipality in the north of Peru. It is currently the third largest microfinance institution in the country with more than 215,000 borrowers and 422,000 savers. The company offers loans to micro and small-sized entrepreneurs and housing loans and operates a wide network of 71 branches.
The company is the first channel of MiVivienda (My house) fund, a government fund dedicated to catalyse funding for housing for low and middle-classes population through financial institutions. It is also the only financial institution that offers highly developed insurance products with a focus on the most vulnerable clients, such as farmers, families, micro and small-sized businesses.
Banco Continental, Paraguay (debt)
Banco Continental is a small and medium-sized enterprises (SME) bank in Paraguay. With its environmental and social risk management system (ESMS) the bank has a leading position. Banco Continental serves over 116,000 clients through the company’s 69 branches, 122 ATMs, 26 self-service ports, and mobile banking network.
Banco Continental is one of the first banks in the country to have a fully-integrated ESMS in its credit process. The bank also has a satellite-image mapping system with which it monitors its clients’ activities to ensure that they are operating in legally-permitted areas.
Banco Internacional, Ecuador (debt)
Headquartered in Quito, Banco Internacional is the fifth largest bank in Ecuador, focusing on small and medium-sized enterprises (SME). The bank has a nation-wide coverage of 87 branches and more than 380 ATMs across 20 provinces, serving more than 206,000 borrowers and 385,000 savers. An ESMS is currently being implemented.
To enhance and improve its services to the productive sector and to demonstrate its commitment to mitigate climate change, the bank plans to increase both its SME and climate-smart projects portfolios. These efforts will make the bank a pioneer in the green SME arena in the country and result in high development impact. The loan provided by Triodos Microfinance Fund will be used to fulfil this ambition.
Belarusky Narodny Bank, Belarus (debt)
Belarusky Narodny Bank (BNB) is a private bank in Belarus, primarily serving small and medium-sized enterprises and private individuals. It has more than 50,000 clients across 15 service centres and 24 ATMs that cover most regions in the country. Through the assistance of its shareholders, BNB developed an environmental and social risk management system (ESMS) for its credit process using international best standards.The bank has a green credit product for environmentally-friendly investment and modernisation of machinery, equipment, and trucks for clients in the transportation industry.
Since adopting its SME-focused strategy in 2009, the bank has since grown its SME portfolio and in 2014 it launched the "Smart Business" program that provides financial and non-financial support to Belarussian SMEs.
A modest rebound in global growth is expected in the second half of 2016 from a quite dismal first half, driven by a rebound in the US, the ongoing accommodative monetary stance in Europe, and a modest recovery of energy and commodity prices. The stronger employment reports in the US in June and July have increased the likelihood of a Fed rate hike towards the end of the year. The Fed is expected to raise its federal funds rate a few times through the end of 2017 to stay ahead of inflationary pressures. Most major central banks are expected to continue their relatively accommodative monetary policies at least through 2017. The US dollar’s long-term path is expected to be one of gradual depreciation.
The principle agreement by OPEC on 28 September to limit oil production provides some support to the oil price, but most forecasters expect only a modest effect. The outlook for exporters to the UK, such as Cambodia, Sri Lanka, South Africa, Belarus and Bangladesh, is somewhat clouded by the Brexit decision: the UK’s real GDP growth is expected to be flat or even modestly negative in 2017.
Despite the challenging macroeconomic situation globally, we managed to balance the risks and our commitment to spur financial inclusion. New investments in South Asia, Africa and Latin America are expected to materialise in the final quarter of 2016.
* All returns stated were calculated based on net asset value, including reinvestment of dividends where applicable. Past performance is not a reliable indicator of future performance.
9 September 2016 - Prospectus amendments
The Board of Directors of Triodos SICAV II has made a number of amendments to the prospectus of Triodos SICAV II. More details can be found in the informative notice. This document can be downloaded here . As part of the procedure to amend the prospectus, shares of Triodos Microfinance Fund can be redeemed free of charge during the month notice period until 10 October 2016.