Risk and Return

You can’t fully understand the risk of an emerging market investment, or optimize returns, from a far-off office. That’s why DWM maintains local teams and why our diligence on investments includes substantial local input.

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Fewer than 10% of the worlds inclusive finance institutions meet DWM’s standards for underwriting.

Our high selectivity when investing in any sector is not a limitation—it’s one reason that DWM’s investments can have risk-appropriate returns with high levels of impact. We believe that rigorously assessing investment risk actually broadens our opportunities because we can undertake successful impact investments that others might not.

“When people say developing-market impact investing is ‘risky,’ what it usually means is that they don’t understand the risks. Understand the risks, and you understand how to make the investment.”

Christopher Mehan, Chief Risk Officer

–Christopher Mehan, Chief Risk Officer

Specialization combined with local presence

DWM’s senior managers have decades of emerging- and frontier-market experience in impact. We have team members in a dozen countries strategically located in Africa, Central America, South America, Europe, and South Asia, and our team has living/working experience in 40 countries.

Specialization combined with local presence

Every DWM senior manager has many years of emerging- and frontier-market experience in impact. We have team members in more than a dozen countries strategically located in Africa, Central America, South America, Europe, and South Asia, and our team has living/working experience in 40 countries.

On-the-ground due diligence

DWM conducts on-site due diligence on its investments, including the evaluation of credit methodology, risk controls, management, operations, governance and impact performance.

Checks & balances

Any new investment requires the approval of the relevant portfolio head, our chief risk officer, the DWM Credit or Investment Committee, and often further approval by external investment committees. Our internal legal team conducts KYC (know your customer) and AML (anti money laundering) checks and oversees pre-investment documentation.

Ongoing monitoring

The DWM Risk Team reviews monthly or quarterly financials and portfolio reports and addresses identified issues with obligors or private equity investees. Investment and/or risk teams conduct periodic on-site reviews. And private equity investments usually include DWM board oversight or hands-on management.

Risk and return: private credit

DWM’s private credit investments provide investors with a diversified set of emerging markets fixed income assets with relatively low correlation, credit spreads typically 200 to 400 basis points above comparable local sovereign yields, and short-term durations of approximately two years.

The asset class as a whole has demonstrated resiliency within the context of emerging markets. Supported by an unrelenting focus on quality of investment, DWM’s credit loss rate has averaged 33bp per annum since 2006.

Learn More About Our Credit Investments

Risk and return: private equity

DWM’s private equity investments provide investors access to category-defining companies and industry-leading management teams that aim to drive strong financial returns. As an activist stakeholder, DWM often seeks substantial minority or majority control to influence the application of high corporate governance standards and to drive value creation.

In 2021, DWM marked its 15th successful exit from a private equity impact investment—successful in terms of growth and maturation for the portfolio company…impactful provision of services to the company’s clients and the communities in which it operates…and the opportunity for risk-appropriate realized returns for DWM’s investors. To date, DWM has returned more than $100 million in capital to its equity LPs, including more than 140% of paid-in capital to our Fund I investors.

Learn More About Our Investments in Private Equity