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What is Vision Microfinance?

Vision Microfinance helps others to help themselves and has a dual return: it gives poor, economically active people the chance, to break free from poverty thanks to their own virility. In addition, investors profit from a series of advantages.

Who is Vision Microfinance addressed to?

Vision Microfinance is addressed to poor and low-income people who lack the financial means to realise their entrepreneurial ideas. The purchase of a sewing machine for example provides a loophole out of poverty for a tailor. In some countries Vision Microfinance is used by women in particular which enables them to gain a better standing in their family and in society. People who are not able to become economically active require other instruments of development politics.

Who is behind Vision Microfinance?

Vision Microfinance has been managed by Absolute Portfolio Management GmbH since its start in 2006. Dr. Vardanyan, an Armenian long term asset manager and author of many research papers on emerging markets and developing countries, is accountable for the fund. The Swiss company Symbiotics SA is the investment adviser.

How high are the interest rates that micro entrepreneurs have to pay for a micro credit and what are the components?

The interest rates for a microcredit are 2 – 4 % per month. These conditions are very attractive to micro entrepreneurs as local money lenders charge usurious interest of up to several hundred percent per month.

The interest rates consist of the following components:

In which countries does Vision Microfinance invest?

Theoretically, Vision Microfinance can invest in any country in the world. The focus, however, is on emerging markets in Latin America, Eastern Europe and Asia.

How many people has Vision Microfinance helped so far?

266 m USD have been distributed in the form of micro credits to 134 different MFIs in 40 countries in form of 287 promissory notes which have helped more than one million people to a better future. Vision Microfinance enables - amongst others - access to food, to medical supplies and to education for the children. Please click here for success stories of micro entrepreneurs.

How can I be sure that my investment arrives where it is supposed to?

Vision Microfinance hands out direct loans to microfinance institutions in developing countries. All transactions before, during and after a loan agreement are checked thoroughly and are absolutely transparent. All contracts for example are deposited with the investment manager, Absolute Portfolio Management GmbH in Vienna, and the depositary bank, UBS Luxembourg S.A.

Microfinance institutions, in return, hand out micro credits to poor, economically active people. Naturally, all transactions are controlled in detail, microfinance institutions are visited on-site and their social performance is assessed. This is why you can be sure that your investment is not dissipated but helps a multitude of micro entrepreneurs.

 

Why are loans handed out via microfinance institutions instead of directly to the micro entrepreneurs?

Microfinance institutions offer an additional security component. They are on-site in emerging markets and check the living circumstances of the micro entrepreneurs thoroughly before a loan is approved. Microfinance institutions have a very close contact with their clients, they visit them regularly and offer trainings and further education alongside microfinance products. Besides, the administrative burden of a direct issuing of loans by the fund to micro entrepreneurs would be impossible.

Which risks do I take on if I invest in Vision Microfinance?

Possible risks of an investment in Vision Microfinance are, for example, a loan default of the microfinance institution or of the micro entrepreneurs. The repayment ration of micro entrepreneurs is 95-98%.

Natural disasters, such as the Tsunami in Asia, can destroy small enterprises and may have a negative impact on the repayment ratio of the micro entrepreneurs. However, experience has shown that during the reconstruction period following a natural disaster the demand for microfinance products increases. The same is true in emerging markets and developing countries which are affected by political turmoil or economic problems.

Are micro entrepreneurs able to pay back the micro credits?

Experience has shown that an impressive 98% of micro entrepreneurs are able to pay back their micro credits in time and with interest. Micro entrepreneurs appreciate the often unique chance a micro credit offers and strive hard to repay the credit . An added incentive is the fact that punctual repayment is a prerequisite for obtaining a further credit.

Often micro credits are handed out to a group of people whose members are solidly liable for the repayment. If an individual does not pay back the credit, he/she would lose face. The strong social structure in developing countries and the regular visits by the microfinance institutions are further reasons for the high repayment ratio.

With what minimum amount can I invest in Vision Microfinance?

Private investors can take part in Vision Microfinance with a minimum investment amount of 1,000 Euros (institutional investors with 125,000 Euros). Please contact your financial adivser or your local banking branch for an investment. Also, please don´t hesitate to contact us if you have any queries.

What is the social impact of Vision Microfinance?

„To invest. And to do good“ – This is the core of all activities of Vision Microfinance. The current social impact of Vision Microfinance can be seen here.

Vision Microfinance endorses the „Smart Campaign“, an intitiative for client protection within the microfinance industry. The campaign is working to establish standards for the appropriate treatment of low-income clients such as transparent pricing, mechanisms for redress of grievances, privacy of client data, ethical staff behavior, appropriate collections practices etc.

Vision Microfinance implements the ESG guidelines (environmental, social, and governance issues) in its daily fund management and was awarded by CGAP (Consultative Group to Assist the Poor) with the „ESG Transparency Certificate’ in 2010 for its exemplary commitment to transparent reporting.

In addition, Vision Microfinance has repeatedly received the LuxFlag label from the rating agency LuxFlag in Luxembourg. LuxFlag examines to what extent microfinance funds really invest in microfinance and MFIs. In this way, investors can check if a microfinance fund is able to uphold ist promises.

 

Was/is Vision Microfinance affected by the events in India?

The events in India have had no direct influence on Vision Microfinance. We have not invested in India since March 2009 and have never invested in Bangladesh. Vision Microfinance deliberately does not invest in listed or other major microfinance institutions. The company utilises stringent criteria to select smaller to medium sized MFIs which guarantee good, sustainable services to their clients.

However, the good reputation has suffered to some extent from the negative and one-sided press coverage. Local problems in India (please see the APM comment for further information) were transfered to the whole microfinance industry which unsettled some investors. Without the investors´capital, however, the market would come to a standstill and millions of people who rely on microfinance could not be supported any longer.

We therefore recommend a close examination of microfinance products prior to an investment: to what extent do they actually invest in microfinance, do they have a quality label from organisations such as LuxFlag of CGAP or what selection process the fund manager uses for MFIs.

Information about Absolute Portfolio Management GmbH

Absolute Portfolio Management (APM) is a leading independent asset management company in the German speaking region which is specialized in asset allocation, analysis and management of alternative investments. The business focus is on institutional clients and high net worth individuals. Our investment philosophy does not measure success in comparison to other investments or indices but purely based on its real return - Absolute.

Corporate Social Responsibilty to us implies the taking of responsibilty in our activities as an asset management company towards our clients, partners and colleagues. Thanks to this, Absolute Portfolio Management GmbH (APM) is included in the leading top 50 impact investment fund managers by the American nonprofit financial services company ImpactAssets ( www.impactassets.org ) in 2011. ImpactAssets 50 is a global database which only selects the leading top 50 impact fund managers. The selection criteria were based not only on the financial return of the investment products but also on their social and environmental return. APM convinced at portfolio level due to its social impact and at company level due to its Corporate Social Responsibility.

About the Fund Manager of "Dual Return Funds" Dr. Arman Vardanyan

Arman has over 15 years professional experience in the area of financial market operations and risk management. His previous positions including Head of Investment Operations Department and Deputy Executive Director for Armswissbank as well as several senior positions in the Central Bank of Armenia, such as Advisor to the Chairman, Director of the Financial Operations Department and Head of the International Operations Department. Further he authored many research articles on economics and finance, in part focused on institutional aspects of microfinance industry.