Alternative Investment Funds, according to the code of law for capital investment, a generic term for all closed-end funds. AIFs also include open-ended investment funds which are regulated by investment law and are not considered to be UCITS (Undertakings for Collective Investment in Transferable Securities), namely open-ended real estate funds, open-ended special funds and, not least, microfinance funds.
The AUM acronym stands for “Assets Under Management.” It refers to the total market value of assets being managed by an investment advisor or financial institution, either from one client or many.
Exclusion or negative criteria are, in the context of a sustainable investment policy, the criteria that prohibit investments in certain industries, sectors or business activities. One example is the fossil energy production sector.
Criteria for selecting companies, i.e. there are certain requirements of the investment policy in ecological, social and ethical terms that must be met in order to be allowed to make an investment.
Due diligence, also known as a due diligence check, is a concept that comes from American business law and private law. Buyers go through a due diligence process before the acquisition of real estate or companies, before investing in company shares or before initial public offerings on the stock exchange. This check serves to determine the value of the item to be purchased by weighing up the risks and analysing strengths and weaknesses.
ESG stands for Environmental, Social, and Governance, which are three criteria ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. ESG investing grew out of investment philosophies such as Socially Responsible Investing (SRI), but there are key differences. Earlier models typically use value judgments and negative screening to decide which companies to invest in. ESG investing and analysis, on the other hand, looks at finding value in companies—not simply at supporting a set of values.
ESG investing differs from impact investing in that ethical business practices are viewed as a way to preserve value, increase value, or return on investment – rather than as important priorities in and of themselves to be promoted through impact investing.
The Gini coefficient or Gini index is a statistical measure of the unequal distributions in a group, developed by the Italian statistician Corrado Gini. Inequality distribution coefficients can be calculated for any distributions. For example, in economics, but also in geography, the Gini coefficient is considered a measure of the income and wealth distribution of individual countries and thus a tool for classifying countries and their associated level of development.
“Greenwashing” is the term used when a marketing campaign focuses on a product with a so-called “green image”. This product is touted for being sustainable and contributing something positive to the environment, for example. However, there is no (scientific) evidence that this is really the case.
A special way of issuing microcredit loans in the field of microfinancing. Several people come together to form a group and are given a joint loan. The members act as guarantors for one another and support one another in the implementation of their business ideas. The group also makes joint decisions as to who will be accepted as a member. Trust therefore plays an important role with this type of loan. The social pressure that the group exerts on each individual member often makes a key contribution to the high repayment rates.
Impact investing is an investment strategy which, in addition to achieving financial returns, also aims to achieve specific positive effects in social or environmental terms. Impact investments may take the form of countless different classes of investment and may lead to many different results. With impact investment, the goal is to make use of money and investment capital to achieve positive social results, which means that investors are offered double returns.
“Impact washing” can be defined as any marketing claim that a product will cause a change in the real economy that cannot be supported by evidence. For example, a fund manager may claim that a particular investment will allow you to reduce carbon dioxide emissions by x thousand tons, or that this is equivalent to taking x thousand gasoline-powered cars off the road, but the manager should have to prove that these cars have been taken off the road at the same rate. Impact washing can be defined as any marketing claim that a product will cause a change in the real economy that cannot be supported by evidence. A fund manager may claim that a particular investment will allow you to reduce carbon dioxide emissions by x thousand tons, or that this is equivalent to taking x thousand gasoline-powered cars off the road, but the fund manager should have to prove that these cars have been taken off the road at the same rate. Impact washing can be defined as any marketing claim that a product will cause a change in the real economy that cannot be supported by evidence. A fund manager may claim that a particular investment will allow you to reduce carbon dioxide emissions by x thousand tons, or that this is equivalent to removing x thousand gasoline-powered cars from
The companies of the informal sector are mostly not registered and therefore not taxable. The informal sector is often the result of the bureaucratization of developing and emerging countries. There are few barriers to entry and the sector is often characterized by self-employment, low and at the same time labor-intensive production, the use of indigenous resources, and the lack of access to organized markets and to traditional forms of credit.
Inclusive growth means a type of economic growth that is based on fairness and provides poorer sections of the population with opportunities to improve their situation.
Investment criteria are characteristics that form the basis for judging in which areas a fund may invest. For example, in the sustainable area, the ESG criteria that allow a selection from an environmental, social or governance perspective and base their investment on this.
Features which form the basis for a judgement as to the areas in which a fund is allowed to invest. In the area of sustainability, for example, this would be from an environmental, social or ethical point of view.
The loan guarantee, also known as security, is intended to protect the beneficiary of the guarantee (the lender) from the financial consequences of the risk in the case that a borrower fails to fulfil their obligations in a debtor-creditor relationship or fails to fulfil them within the agreed time. The security offered may take the form of savings or material resources, for example. In most cases, a lack of security prevents microentrepreneurs in emerging and developing countries from obtaining loans from the larger, traditional banks.
The umbrella term “microfinance” stands for the provision of banking and financial services to low-income and poor clients without financial collateral. The currently predominant service is the provision of microloans. In addition, there are offers for bank and savings accounts, payment transactions and insurance, among others.
An important aspect of microfinance is the so-called microloan, which is granted to a small or microenterprise by a microfinance institution. This is the most common form within microfinance. It is often a small amount of money, which however depends on the institution, country and activity.
This is a very small business that exists almost exclusively in the informal sector. Microenterprises have fewer than ten employees and are usually the only source of total family income. They can serve as a stepping stone to building larger, more secure and stable businesses. Examples include small kiosks, carpentry shops and sewing workshops.
In many emerging and developing countries, small and medium-sized enterprises (SMEs) are not able to secure their own financing. It is often the case that the national capital market lacks the financial structure to refinance the necessary investments. There are only very few institutions whose services are tailored to the needs of SMEs. The financial requirements of the SMEs is too great for microfinance institutions (MFIs), yet they are too small for traditional bank loans. And then again, they often lack the potential for growth, returns and resale for them to be of interest to venture capitalists. This results in an enormous gap in terms of financing (the “missing middle”) for the segment between the larger medium-sized companies and that of the microentrepreneurs.
The NAV refers to the net worth of a firm and is calculated as the difference between the total assets and total liabilities of the firm. NAV is usually referenced in the context of mutual funds and Exchange Traded Funds (ETF) and is expressed on a per-share basis. It is the price at which the units of the fund, registered with the Securities and Exchange Commission (SEC), are traded.
Ein Nicht-Banken-Finanzinstitut (NBFI) ist ein Finanzinstitut, das keine vollständige oder herkömmliche Banklizenz besitzt oder nicht von einer nationalen oder internationalen Bankenaufsichtsbehörde beaufsichtigt wird. NBFI bieten bankbezogene Finanzdienstleistungen wie Investitionen, Kredite und Risikopooling an. Beispiele hierfür sind Versicherungsgesellschaften, Pfandleiher, Mikrokreditorganisationen und Währungsumtausch.
A non-governmental organization (NGO) is a non-profit group that functions independently of any government. NGOs, sometimes called civil societies, are organized on community, national and international levels to serve a social or political goal such as humanitarian causes or the environment.
The OECD stands for the Organization for Economic Cooperation and Development. It’s an association of 37 nations in Europe, the Americas, and the Pacific. Its members and key partners represent 80% of world trade and investment. The goal of the OECD is to promote the economic welfare of its members. It also coordinates their efforts to aid developing countries outside of its membership. As a result, its programs help reform in more than 100 countries worldwide.
Is the percentage of gross loan portfolio that is at risk. So, PAR 30 is the percentage of the gross loan portfolio for all open loans that is overdue by more than 30 days. It is calculated as follows: Total Principal Balance divided by Total Principal Amount Released of all open loans.
An action taken within a sustainable investment concept in order to filter out the most suitable investment with the help of certain set exclusion criteria.
In its 2030, Agenda, the United Nations specified 17 Sustainable Development Goals (SDGs) for sustainable social, economic and environmental development of all countries of the world. These goals were adopted in 2015 and should be achieved by 2030. Through our investments in microfinance and financial inclusion, we contribute to the achievement of 5 of these 17 Sustainable Development Goals. Learn more about the SDG‘s.
Microfinance is aimed at small and micro entrepreneurs, i.e. mostly individuals who have set up their own business with their business idea or want to do so. Microenterprises are defined as companies with up to ten employees. Due to their lack of collateral, small and micro entrepreneurs have very limited access to the traditional financial market and are therefore dependent on microfinance-level offerings. The logical development of microfinance is the financing of small and medium-sized enterprises (see SME financing).
Financing of small and medium-sized enterprises. In our case, we focus on the financing of small and medium-sized enterprises in developing and emerging countries. These companies often lack access to the capital market because the financing needs are too large for microfinance institutions and too small for traditional commercial banks.
Microfinance is aimed at small and micro entrepreneurs, i.e. mostly individuals who have set up their own business with their business idea or want to do so. Microenterprises are defined as companies with up to ten employees. Due to their lack of collateral, small and micro entrepreneurs have very limited access to the traditional financial market and are therefore dependent on microfinance-level offerings. The logical development of microfinance is the financing of small and medium-sized enterprises (see SME financing).
Social indicators or social indicators are measuring instruments used to determine the quality of life, overall condition and development processes of a society and to compare them with other societies. In a narrower sense, they are indicators for measuring quality of life, as opposed to the purely economic measurement of living standards by gross national income. Examples include life expectancy, infant mortality, illiteracy rate, poverty rate, home ownership rate, etc. In a broader sense, they are also other measures used to describe social structure, social change and other issues considered important in sociopolitical terms.
Socially Responsible Investment (SRI), also known as social investment, refers to investments that are considered to be socially responsible on account of the type of business activity carried out by the company that is being invested in. Socially responsible investments can be made by investing in individual companies that have a positive social value or via socially responsible investment funds. Usually the SRI makes use of fixed exclusion criteria which exclude certain companies or sectors. In accordance with this, the approach does not per se actively seek to achieve a social impact, but rather focuses on ensuring that certain ethical standards are complied with, and is therefore to be distinguished from Impact Investing.
“Sustainable investing” is the general term for investments that are both sustainable, ethical and responsible, social and environmental, but still keep the traditional points of risk and return in mind.
TER is an abbreviation for “Total Expense Ratio”. It is the English name of an important key figure for investment funds, which can be translated as total expense ratio. It is intended to make transparent how high the running costs of a fund are – i.e. the costs that are incurred each year. The costs that flow together in the TER always relate to the sum of the money invested. That is why it is expressed as a percentage.
The traditional capital markets or financial markets bring together providers of capital with those needing capital. The economic importance of the financial markets also stems above all from the fact that investors make available long-term finance, both equity capital and loan capital. In return for this, the investors receive a return. The traditional capital markets in emerging and developing countries comprise the sources of funds that were available before the start of microfinancing, for example the large banks. These markets are not available to all market participants, often because there is a lack of incentive for the investors.