Triodos Fair Share Fund empowers individuals and small businesses because it opens up their access to finance, especially for those who are not currently being served by traditional banks. Tim Crijns: “The loan amount, which is between USD 900 and USD 1000, is usually considered too small by traditional banks in emerging markets. But these sorts of loans are empowering and significantly improve the lives of real people.”
Specialising in SDG solutions
Triodos Fair Share Fund increasingly focuses on investing in financial institutions that contribute towards the achievement of the UN Sustainable Development Goals (SDGs). Crijns explains: “More and more financial solutions that are being developed are addressing one or two of the Sustainable Development Goals. Products are focusing on promoting access to basic needs, things such as education, healthcare, housing, clean energy and sustainable agriculture. In this way, the fund is also a catalyst for the achievement of the global goals.”
Investing in innovation
“Innovation is also an opportunity for the fund,” Crijns says. “New technology such as mobile money is lowering costs and helping reach people in rural places. We want to invest in institutions that make use of innovative solutions, but it needs to be done responsibly.”
One example of tapping into this sort of opportunity in 2018 was the investment made in Samunnati, which is based in India and specialises in agri-finance. Around 60% of Indians derive their livelihood from agricultureand Samunnati identified the bottlenecks in the value chains of smallholder farmers. Problems include lack of institutional support for production and post-production handling, fragmentation of the sector that leads to poor economies of scale, and lack of access to timely and affordable credit sources. These issues can limit producers from pursuing value-added agriculture and innovation.
“Samunnati is quite innovative in the way it works with the whole agribusiness value chain,” says Crijns. “They make use of existing payment systems between farmers and cooperatives. When they lend money to a small-scale farmer, every time that farmer sells something to the cooperative, the cooperative will pay the farmer for the produce and deduct a small amount for the loan repayment. Samunnati is broadening its reach to many more people this way.”
Triodos Fair Share Fund invests in more than 40 countries, so country and currency risks need to be carefully managed. Of managing the risks Crijns says: “We need to constantly monitor what’s going on in all of the countries where we’re active. Last year for example, there was social unrest in Nicaragua. We had to have close communication with the investees on the ground to properly understand what was going on, to see how we could support them and how we could best protect our loan.” He also says that the fund’s global spread, which extends to more than 40 countries, limits the impact of events in one single country.
Outlook for 2019
The fund volume grew to EUR 360 million in assets under management during 2018, but Crijns expects that figure to grow to EUR 400 million in the coming year. “The pipeline is there,” he says. “We will grow investments in institutions we already have in the fund, but we will also expand to new institutions that have a focus on the sustainable development goals or those that make use of innovation and technology. There are still too many people in the world without access to finance.”
About the fund
Triodos Fair Share Fund offers retail investors in the Netherlands the opportunity to contribute to the development of inclusive financial sectors in developing countries and emerging markets. Investments bolster real economies and stimulate local entrepreneurship by providing debt and equity to financial institutions who in turn offer financial services to locally based low-income groups and small and medium-sized enterprises. In 2018, Triodos Fair Share Fund had a return of 4.1%, which is in line with its five-year average. It financed 98 financial institutions in 43 different countries and grew assets under management to EUR 360 million.