Luxflag Microfinance

The world's first Microfinance Label was launched in July 2006 by LuxFLAG with the aim of reassuring investors that the Fund (Microfinance Investment Vehicle - MIV) actually invests, directly or indirectly, in the microcredit sector.

Summary data :

Topic	Description
Label	Luxflag-Microfinance
Nationality	Luxembourg - English
Management	Label issued by LUXFLAG an independent Luxembourg-based non-profit rating agency
Label Type	Thematic
Website	https://www.luxflag.org/labels/microfinance/
Market	The label is aimed at Luxembourg funds and SICAVs.
Products	30 funds and products as of September 2024
Links to funds	https://www.luxflag.org/labels/microfinance/labelled-mivs.html
Criteria	https://www.luxflag.org/media/pdf/2021-Q2-MF-List-of-LuxFLAG-Labelled-Products.xlsx
Periodicity	12 months

Analytical data :

Topic	Description
Description	The world's first Microfinance Label was launched in July 2006 by LuxFLAG and aims to reassure investors that the Microfinance Investment Vehicle (MIV) actually invests, directly or indirectly, in the set
Genesis and development	The world's first and only Microfinance label was launched in July 2006 by LuxFLAG. The label includes more than 60 percent of the world's existing Microfinance Investment Vehicles (MIVs), representing more than 5.9 billion assets under management
Goals	The primary objective of the LuxFLAG Microfinance Label is to assure investors that the Microfinance Investment Vehicle (MIV) actually invests, directly or indirectly, in the microfinance sector. The MIV is authorized, rather than giving direct loans to microfinance institutions (MFIs), to invest in other MIVs themselves that invest more than 50 percent in Microfinance.
Promoters and administrators	The Label was created by the LUXEMBOURG FINANCE LABELLING AGENCY, an independent, international nonprofit association created in Luxembourg in July 2006 by seven public and private founding members with the aim of promoting the responsible investment sector by assigning a recognizable label to microfinance investment vehicles
SRI Approach	To qualify for the label, funds will need to have a Portfolio microfinance corresponding to at least 50 percent of the MIV's total assets and a well-defined impact investing strategy and objective
Mandatory Criteria	The mandatory criteria are to have a Portfolio microfinance corresponding to at least 50 percent of the MIV's total assets and to have an impact investing strategy and objectives (companiesand funds intent on generating social and environmental impact along with a financial return) whose impact is measurable and concrete.
Additional criteria	Only minimum requirements for access to the label are given
Allocation process	The Society applicants must verify their eligibility with Luxflag and prepare a letter of intent with a checklist of documents. The Label checks their eligibility and submitted the file to the Microfinance Label Eligibility Committee, which gives an eligibility opinion. The Board of Directors of Luxflag decides on the awarding of the label. The process takes about 2 months. The Label lasts for one year and must be renewed.
External certification	The Label is valid for one year, and it will be possible to renew it only after ensuring that the eligibility criteria are still met. To this end, LuxFLAG will send the fund an invitation to submit an updated application at least two months before the expiration of its Label
Focus on transparency	The fund must necessarily be classified as an Article 9 (SFDR) and publish at least annually audited financial information for investors
Focus on periodic checks	Compliance with the criteria is monitored every 12 months by LuxFLAG and, in addition, each fund must be subject to supervision by an EU member state or supervision equivalent to that of EU member states
Related parties	Luxflag is a 'joint initiative of the Luxembourg government, the Luxembourg Finance Promotion Association, the EIB, the industry association of fund managers (ALFI) the nonprofit ADA (Microcredit) Association, the Association of Luxembourg Banks, and the Luxembourg Stock Exchange.

How to read table data :

ISIN: is the identification code most commonly used to identify funds, ETFs and other financial instruments
Fund: by clicking, you will be able to view the simplified fund fact sheet
Currency : is the currency in which the fund is denominated
Esgap: "ESG Adjusted Performance." It is a proprietary measure of MCSR that allows a summary evaluation of funds considering the quality of the sustainable investment process, continuity, and measurement of performance and risk parameters. The maximum value is 18 points.
MCSRIntensity: This is a proprietary measure of MCSR that summarizes assessments of the quality of the sustainable investment process. Funds rated 5 have an excellent investment process in ESG instruments. Funds with lower scores are still preferable to funds that do not engage in positive finance.
Average Intensity: This is the average of ESG intensity ratings related to individual parameters
SFDR: This is the European regulation that commits Society management to declare whether the fund also considers ESG aspects (Article 8) or whether ESG aspects are prioritized over financial aspects (Article 9)
Performance: Measures the fund's performance continuity (expressed in euros) over three different time periods with a scale from 1 to 5. Funds rated 5 are excellent in performance.
Risk: Measures the continuity of risk taken by the fund in terms of volatility over three different time periods with a scale of 1 to 5. Funds rated 5 are excellent at controlling risk.
Cost: This is the aggregate cost of the fund on an annual basis. In Portfolio it is the aggregate cost of all its component instruments.
SRRI: This is the legal parameter that defines the measure of risk that the fund should maintain over time. The scale ranges from 1 (lowest risk) to 7 (highest risk)
Performance 6 months / 1 year / 3 years: performance expressed in euros over the past 6 months / 12 months / 36 months
Classification: either the market in which the fund invests or the management objective, depending on the context
Instrument: Indicates whether the financial instrument is a fund, ETF or fund of funds
Type: Indicates whether the fund's Portfolio and investment policy is predominantly equity, bond, whether it balances the two components, or whether the manager is free to vary the extent and risk
Theme : when a fund is "thematic," it means that it specializes in managing in a specific investment area.
Environment: is the assessment of ESG intensity related to Environmental aspects
Good Governance is the assessment of ESG intensity related to aspects of good governance
Society is the assessment of ESG intensity related to aspects of Society
Transparency is the assessment of the intensity with which Society management is transparent in its ESG content
Processes is the assessment of the intensity with which Society management is qualified in its ESG processes