Risk Return
Risks
Investing in Dutch Microfund entails certain risks which could affect the dividend yield and value of the shares. These risks may cause the value of the investment in the fund to decline and cause investors to receive less than what they paid for their investment.
For each investment category in which the Fund invests, the risks relevant to that category should be taken into account. The investor needs to be aware of these risks to be able to assess the investment in the fund effectively. Potential investors are invited to study this prospectus carefully and they should, amongst other things, consider the risk factors associated with the investment in the various investment categories before deciding to invest in the Fund.
Risk management
Because of the nature of the microfinance activities, investing in Dutch Microfund involves certain considerations specific to 1) the emerging markets 2) the microfinance industry and the small and medium enterprises. Through a thorough risk assessment and an ongoing and proactive risk management, the Fund mitigates risks for investors.
Country selection
The underlying investments of the fund are mainly in transition or developing countries. These countries can be subject to political risks, economic unstable and poorly developed financial infrastructure. Through in-depth country research and comparison, Dutch Microfund selects the most promising investment opportunities.
Selection criteria
The Fund might invests in organizations especially MFIs with a limited tracking records. However the investees must have healthy financial performance, efficient governance structure, skilled management team and clear target group orientation. For each investment, the fund manager conducts thorough analysis.
Investment monitoring
The fund invests in MFIs which provides credit to micro entrepreneurs without asking for collateral. In order to control risks, investees must provide financial reports on a quarterly/half-year basis. In addition, social impact reports must be submitted regularly as well.
Currency hedging
Investments of the fund are primarily denominated in hard currency such as EURO and US dollar. In the fund, forex risk is hedged through currency swaps instruments. If investments are denominated in other currencies in the future, the fund may engage in the local currency hedge.
Liquidity
The fund invests largely in non-stock listed assets, or assets not actively traded on a regulated market. The investments are therefore relatively illiquid. Through mixing and matching different asset classes and investment vehicles, the fund is able to provide monthly liquidity for the investors. Investors should regard microfinance investment as a long term sustainable investment.
