Stable impact in turbulent times

January and the beginning of February 2016 have been turbulent times for financial markets. The German equity index DAX fell by almost 20%, the CAC40 by 15% and the FTSE100 by 10%. Bond yields have decreased and banks are considering introducing negative interest rates for retail clients. The last period characterized by significant uncertainty was in August / September 2015, only few months ago.

Over the past weeks the phone has started ringing and potential clients have asked about how to invest in LMDF (in case you don’t know: Either through your bank or directly with us. We also offer a great investment plan product for your children or grand-children). This comes somewhat as a surprise since we have not changed anything in our strategy:

  • We continue to focus on providing financing for micro-entrepreneurs in frontier markets through institutions with a social mission we believe in and;
  • We balance stable returns to investors with the provisions of responsible financial services to the poor. Individual investors benefit from the risk guarantee provided by our impact  shareholders.

This is to say we have not changed what we have been doing for 6 years but the world around us is changing (at least in the financial markets).

The question I wonder about is the question of the time horizon of our actions. In our vision we speak about how we “aim to contribute to the alleviation of poverty by supporting organizations that empower people and stimulate entrepreneurship”. This is not a task of months but requires a time horizon measured in years, if not decades. Relationships with our investees are meant to last for a long time.

And this approach seems to pay off in times of uncertainty and (financial) turbulence.

All the best,