Actiam launches €100mn microfinance fund for retail investors

Retail investors who want to invest in microfinance in emerging and developing countries can now do so through the Actam Impact Financial Inclusion Fund.

Cashpor Micro Credit (CMC) in India, one of Actiam's investments, serves clients in the most deprived districts in five states in Northern India. CMC

"Demand for investments among private persons is rising, especially now that interest on savings is at a historic low and everyone is looking for a return,” said Theo Brouwers, managing director of Actiam Impact Investing.

“At the same time, the demand for impact investing is increasing in line with the growing focus on sustainable funds, especially among the next generation investors. With the introduction of this fund we are making impact investing available and widely accessible."

The new fund was launched earlier this month by Actiam, a subsidiary of Athora Netherlands which manages assets exceeding €21bn.

Actiam is aiming to raise €100mn from Dutch retail investors within one to two years, Brouwers said. The fund is targeting a minimum annual net return of 3%.

‘Shake up’

The fund, which is tradable on Euronext every day, will invest through the Actiam Financial Inclusion Fund, the investment firm’s flagship strategy, launched in 2014.

The investment fund’s decision to open up its flagship strategy to the retail market “may shake up this market a bit,” Brouwers said.

“Our institutional approach, combined with competitive fees and low costs, doesn’t exchange return for impact and doesn’t make concessions to the risk-return profile.”

Financial and social impact record

The financial inclusion fund strives for a positive social impact by issuing loans to financial institutions in emerging and developing countries.

These in turn provide local microenterprises, smaller SMEs and households with loans and savings accounts. Financial inclusion contributes to improving living standards and thus to the realisation of UN Sustainable Development Goals (SDGs) including No Poverty, Decent Work and Economic Growth as well as Gender Equality.

Since its inception the Actiam Financial Inclusion Fund has achieved an internal rate of return (IRR) of 3.4%, according to its website.

It has provided over 355,000 micro-entrepreneurs and small SMEs, mostly made up of women living in rural areas, with (improved) access to funding.

Actiam offers retail investors “a good track record, low management fee and an institutional approach,” said Brouwers. “This means we are constantly checking whether we are being paid for the risk we are taking,” he added.

“If you choose to make an impact investment as a retail investor, why would you let it come at the expense of returns?,” said Brouwers. “This is not philanthropy. This is a serious investment, which fits in with all the other investments you make, with a risk-return profile that is right, that fits."

Continued double-digit growth in financial inclusion

"Ninety percent of our investors are made up of pension funds," with investments starting from one million euros, Brouwers said.

Actiam targets both institutional and retail investors “because the market for microfinance and financial inclusion is still growing, on average at about 10% a year,” said Brouwers.

“There are still billions of people who have no bank account and no access to financial services. So the market is still in need of capital.”

In addition the Covid-19 pandemic has put a renewed spotlight on growing social inequality in emerging markets among investors.