Social impact made visible
Microfinance projects in 2025
Microfinance is becoming increasingly important as an asset class
In recent years, microfinance has developed into a serious alternative within institutional portfolios. In a market environment characterised by uncertainty, many investors particularly value its stable returns and low correlation with traditional capital market movements and asset classes. Even in challenging investment years such as 2008 or 2022, microfinance was able to deliver a positive return contribution to the portfolio. (Please note, however, that losses on the capital invested may also occur.) Microfinance investments offer direct access to the real economy in emerging and developing countries, thereby facilitating a combination of financial return and measurable social impact. In our view, it is precisely this link that is crucial: capital is not merely invested but is specifically deployed to generate economic development.
Years of experience and specialisation
Erste Asset Management has been active in microfinance as an asset class for many years. This area received a significant boost following the integration of Impact Asset Management in 2025, a provider specialising in microfinance and impact investing. This expanded the firm’s existing capital markets expertise to include in-depth know-how in the selection, analysis, and monitoring of microfinance institutions.
Today, the investment process is based on a close integration of financial analysis, ESG assessment, and a systematic evaluation of social impact. This combination is a key prerequisite for actually achieving the desired “two-fold return” – both financial and social.
The Social Impact Report as benchmark
A key tool for measuring and documenting this impact is the annual Social Impact Report. It highlights the extent to which the funds provided actually reach end customers and the changes they bring about. The latest figures underscore the reach of these activities:
- Since its launch, a total of USD 2.7bn has been invested
- 352 microfinance institutions in 69 countries have been financed
- In 2025, the fund was invested in 114 institutions across 34 countries
- In total, about 228,000 end borrowers were reached during the reporting year
A significant proportion of these funds is deliberately channelled into markets where access to financial services is limited and where capital can generate particularly high economic benefits.
Financial inclusion: support of women
The core principle of microfinance is to provide access to capital for economically active people who are largely excluded from the traditional banking system. These are often micro-entrepreneurs, small-scale farmers or local service providers. The composition of the target groups reached is striking: about 78% of borrowers are women, and a significant proportion of the loans also go to rural areas. These funds enable many people to generate their own income, better mitigate risks, and stabilise their economic situation in the long term. Microfinance thus often acts as a starting point for broader economic development at a local level.
Making tangible impact – an insight into selected projects
The impact of microfinance can be understood particularly well through concrete examples, such as those documented in the Social Impact Report 2025:
Entrepreneurial growth through one’s own efforts – an example from Uzbekistan
An impressive example is the story of Nilufar, an entrepreneur in Uzbekistan. What began as a small home-based business selling linen products has, over the years, grown into a well-established company. With the support of microfinance, she has been able to systematically expand her business, open branches and professionalise her production and distribution structures. Today, her company employs 19 people, 16 of whom are women. The project clearly demonstrates how continuous access to finance can transform a micro-enterprise into a source of stable jobs, whilst at the same time strengthening women’s economic independence.
Linking finance and sustainability – an example from India
Another example is Hindon Mercantile Limited in India. The company follows a business model that combines traditional microfinance with technological and environmental aspects. It specifically provides finance to underserved customer groups whilst promoting investment in sustainable technologies. Particularly noteworthy is the financing of more than 80,000 electric vehicles, as well as investments in renewable energy and charging infrastructure. In this way, the company combines economic development with a direct contribution to reducing emissions and improving access to energy.
Women’s financial independence – an example from Pakistan
The Kashf Foundation in Pakistan is a prime example of the targeted support for women through microfinance. With a network of over 400 branches, the organisation reaches more than 800,000 clients, about 99% of whom are women. In addition to traditional financial products, Kashf also offers educational programmes and initiatives to promote economic independence. One innovative aspect is the use of Sharia-compliant financing instruments such as social sukuk, which have allowed the organisation to tap into additional sources of capital. Since its foundation, loans totalling more than USD 1bn have been granted to over eight million female borrowers. The social impact extends far beyond mere financing, as financial independence often leads to improvements in education and health within families.
Building local value added – an example from Peru
The story of a small business owner in Peru also illustrates the long-term impact. Through a series of successive loans, the owner was able to gradually expand his business model and eventually move into production. What began as a simple first step towards self-employment has thus developed into a small industrial enterprise that today creates jobs and meets local demand. This example shows how microfinance can facilitate the transition from the informal sector to more structured economic activities.
Employment effects and economic impact
These examples are also reflected in the aggregate figures: in 2025, the funded activities created more than 34,000 jobs in small and medium-sized enterprises and supported numerous further employment opportunities in micro-enterprises. Microfinance investments thus make a direct contribution to the economic momentum in the respective regions and help to build stable sources of income.
Contribution to global sustainability goals
In particular, these investments contribute to the UN Sustainable Development Goals:
- No poverty (SDG 1)
- Gender equality (SDG 5)
- Decent work and economic growth (SDG 8)
Furthermore, the funded projects give rise to additional benefits in areas such as education, energy, and infrastructure.
Investment opportunities for institutional investors
The I-AM Vision Microfinance Strategy is available to institutional investors through two complementary funds:
- The I-AM Vision Microfinance fund invests in a broadly diversified portfolio of microfinance institutions in emerging and developing markets. The focus is on providing debt financing to carefully selected institutions, which in turn finance micro-entrepreneurs and small businesses. The aim is to generate regular income amid a constantly high level of stability while ensuring broad regional diversification.
- The I-AM Vision Microfinance Local Currency fund complements this approach by investing more heavily in local currencies. As a result, it can gain additional access to local markets and deepen its impact, particularly in rural regions. While this approach opens up additional sources of return, it also entails specific currency risks.
Both funds are classified as SFDR Article 9 products and pursue a consistently impact-oriented investment approach that combines financial and social objectives. Please note that investing in the funds mentioned entails risks as well as opportunities.
Conclusion
Microfinance has established itself as an asset class that extends far beyond a purely financial perspective. The combination of stable returns, low correlation with traditional asset classes, and a clearly traceable impact makes it a key component of strategic asset allocation. The Social Impact Report 2025 not only presents aggregated key figures, but above all shows how capital is actually being used and what changes it can bring about on the ground.
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Disclaimer
This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.
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