Danareksa launches open-end mutual funds<\/p>\n
JAKARTA (JP): PT Danareksa Fund Management (DFM) launched
\nyesterday three packages of open-end mutual funds worth nearly Rp
\n1.5 trillion (US$640 million).<\/p>\n
Company president Iwan Pontjowinoto said yesterday that the
\ncompany had collected a total of Rp 236 billion from sponsors and
\nexpected to raise another Rp 1.2 trillion from institutional and
\nindividual investors in the next 12 months.<\/p>\n
He said that the funds, Indonesia's first ever open-end mutual
\nfunds, are divided into three packages -- Melati Funds, Anggrek
\nFunds and Mawar Funds -- each with a nominal asset value of Rp
\n500 billion.<\/p>\n
\"The funds will respectively have 500 million shares, each
\nwith a face value of Rp 1,000,\" he said at the launching of the
\nfunds. \"The funds will be sold to investors at their par value.\"<\/p>\n
Iwan said that each package will have different investment
\nconcentrations, with Melati focusing on bonds and money market
\ninstruments, Anggrek on shares and debt instruments, and Mawar on
\nshares, debt and money market instruments.<\/p>\n
\"We hope the combination of the investment concentrations of
\nthe three mutual funds will match investor demand,\" he said.<\/p>\n
Danareksa Fund Management, a subsidiary of the state-owned PT
\nDanareksa Securities, is the first company to issue open-end
\nmutual funds in the country.<\/p>\n
Unlike closed-end funds, open-end mutual funds are not listed
\non the stock exchange.<\/p>\n
Several other investment funds are expected to soon enter the
\nopen-end mutual investment industry, which was opened earlier
\nthis year following the enactment of the new capital market law.<\/p>\n
PT Bahana TCW Investment Management and a number of banks,
\nincluding Bank BDNI, Amro Bank and Bank Bira, are still waiting
\nfor licenses to set up similar mutual funds, according to the
\nCapital Market Supervisory Agency (Bapepam).<\/p>\n
No guarantee<\/p>\n
Iwan said that Danareksa Fund has set up different types of
\nmutual funds so that investors can choose the investment
\ninstruments that suit their demands.<\/p>\n
\"Cautious investors, for example, might invest in less risky
\nMelati, which invests all of its portfolio in fixed-income
\ninstruments,\" he said. \"Long-term investors might choose the more
\nfluctuating Anggrek and Mawar funds.\"<\/p>\n
He could not guarantee, however, that investors would receive
\ngains higher than those acquired from investments in time
\ndeposits or bonds.<\/p>\n
A mutual fund manager is not allowed, by law, to promise
\ninvestors a certain level of earnings from their mutual funds.<\/p>\n
He said the Melati fund, which focuses its investment on bonds
\nand money market instruments, could theoretically give an annual
\ngain of 17.5 percent, a bit higher than the average 16 percent
\ninterest rates offered by bank deposits.<\/p>\n
The higher income is possible because unlike individuals or
\nordinary companies, a mutual fund manager is exempted from paying
\na 15 percent income tax on interest earnings obtained from
\ndeposits or bonds.<\/p>\n
Iwan said that investors will, therefore, be able to make a
\nprofit on their mutual fund investments, even after redemption
\nfees and charges.<\/p>\n
Securities analysts hailed the launching of the country's
\nfirst open-end mutual funds, saying that the new investments will
\ngive investors more alternatives.<\/p>\n
Adler Manurung, a capital market analyst, said the investment
\ninstruments would benefit individual investors, especially those
\nwho do not really understand about the mechanism of capital
\nmarket activities.<\/p>\n
\"If you lack stock trading skills, you'd better invest in the
\nmutual funds. It will be safer,\" he said. He warned, however,
\nthat investors should be selective and invest only in mutual
\nfunds managed by trustworthy fund managers.<\/p>\n
Manurung said that the level of earnings will be more
\ndetermined by the capability of fund managers to manage their
\ninvestment portfolios.<\/p>\n
Adriansyah Chaniago of PT BBS Securities shared Manurung's
\nviews, saying that investors should first assess the financial
\nstrength of the fund managers before joining their funds.<\/p>\n
\"We should be certain that the fund manager has the money when
\ninvestors redeem their shares,\" he said. \"It is important because
\nmost fund managers' funds have been invested in stocks, bonds or
\nother debt instruments.\"<\/p>\n
Iwan said that Danareksa Fund has appointed Citibank as the
\ncustodian of its three mutual funds and Merrill Lynch Asset
\nManagement as its investment advisor.<\/p>\n
Danareksa fund, which currently manages 16 series of semi
\nopen-end mutual funds, with combined net total assets of around
\nRp 307 billion, will set up sales promotion centers in important
\ncity areas such as Pondok Indah and Mangga Dua.<\/p>\n
Iwan said the company's semi-open-end instruments -- more
\npopularly called Sertifikat Danareksa -- would be gradually
\nrepackaged into either Melati, Anggrek or Mawar funds.<\/p>\n
The value of their assets in Danareksa certificates will be
\nincreased by 8 percent if the certificates are converted into the
\nopen-end instruments, he said.<\/p>\n
The government has issued a number of incentives to boost the
\nmutual fund industry such as the exemption of income tax when
\nthey are redeemed and on earnings acquired by fund managers from
\nbonds. Mutual fund sponsors are also allowed to invest more than
\n1 percent of the fund's total value, providing fund managers with
\nsufficient funds for initial investment portfolios.<\/p>\n
Unlike sponsors, ordinary buyers, both foreign and domestic
\ninvestors, are only allowed to own up to 1 percent of the fund's
\ntotal assets. (hen)<\/p>",
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