Mutual funds remains the best alternative<\/p>\n
Hendarsyah Tarmizi, The Jakarta Post, Jakarta<\/p>\n
Although many people have turned their investments into shares
\nto take advantage of the bullish stock market, fund managers
\nstill believe that mutual funds will remain the favorite among
\nindividual and institutional investors.<\/p>\n
Besides, stocks are much riskier, and many local investors
\ndoubt if the bullish condition of stock trading will last until
\nthe end of the year.<\/p>\n
Factors that could alter the current market trend will
\ngenerally be non-economic, such as the national elections.<\/p>\n
Some fear that political conflicts that might occur during the
\nApril general election and the country's first direct
\npresidential election in July could affect political stability
\nand security, although political and economic analysts dismiss
\nsuch fears.<\/p>\n
Alder H. Manurung, an investment fund manager, believes that
\nmutual funds will continue to be a prime investment option for
\nboth individual and institutional investors this year, despite
\nthe relocation of large amounts of investment from mutual funds
\nto the stock market.<\/p>\n
Alder is optimistic that the growth of mutual funds will
\nremain high, albeit not as high as in 2003. \"This year, mutual
\nfunds investment will grow by about 50 percent. With this
\nincrease, total mutual funds assets would reach about Rp 150
\ntrillion (US$17.65 billion),\" he writes in InfoBank financial
\nmagazine.<\/p>\n
Mutual funds was first introduced in Indonesia in 1996, but it
\ndid not get much publicity until 2002, thanks to the involvement
\nof banks offering mutual funds.<\/p>\n
According to data released by the Capital Market Supervisory
\nAgency (Bapepam), the net asset value of mutual funds surged to
\nRp 46.60 trillion at the end of 2002, a 480 percent increase from
\nRp 8 trillion in 2001. The number of mutual fund holders also
\nrose by almost 145 percent to 125,820 in 2002, from 51,723 in
\n2001.<\/p>\n
In 2003, the net asset value of mutual funds continued to
\nincrease amid the falling interest rates offered by local banks.
\nAt the end of August 2003, the net asset value of existing
\nmutual funds rose to Rp 81.32 trillion, a 75 percent increase
\nfrom Rp 46.61 trillion in 2002. The number of mutual fund holders
\nrose to 149,358 during the same period.<\/p>\n
Bapepam has not yet released complete data for the 2003 fiscal
\nyear, but mutual fund analysts estimate that the net asset value
\nof mutual funds reached at least Rp 100 trillion by year's end.
\nAccording to this estimation, the increase in the total net asset
\nvalue in 2003 would be about 105 percent.<\/p>\n
As with Alder, other fund managers are also optimistic about
\nthe healthy growth of mutual funds. Although they might be less
\noptimistic than Alder, they are still upbeat that growth will
\nreach at least 20 percent.<\/p>\n
Rosinu, president of Trimegah Securities, estimates that the
\ngrowth rate of mutual funds would decline to 20 percent this
\nyear, partly due to the migration of investment to the stock
\nmarket.<\/p>\n
\"Although mutual funds provide returns of between 9 percent
\nand 12 percent, many investors will still invest their money in
\nstocks due to concerns over electoral uncertainties,\" he said.<\/p>\n
At present, four popular types of mutual funds are available
\nin the market.<\/p>\n
One is the fixed income mutual funds, which are largely
\ninvested in fixed income financial instruments such as time
\ndeposits, corporate and government bonds. Another is stock-based
\nmutual funds, which are invested in shares traded on the stock
\nmarket; a third is the foreign currency-based mutual funds; and
\nthe last is the mixed mutual funds, which are diversified into
\nstocks, fixed-income mutual funds and foreign currencies.<\/p>\n
The annualized return of fixed-income mutual funds as of Feb.
\n16, reached between 10 percent and 12 percent -- a time deposit
\noffers between 7 percent and 8 percent.<\/p>\n
Mixed mutual funds booked an annualized return of 15 percent
\nto as high as 80 percent as of this month, depending on where the
\nbulk of the funds are invested.<\/p>\n
Stock-based mutual funds provided the highest return. The
\nannualized return of this investment option ranged from 50
\npercent to more than 100 percent as of this month, thanks to the
\nsharp increase in stock prices. Share prices increased by an
\naverage of 60 percent in 2003, but the increase of the prices of
\ncertain shares was higher at more than 100 percent.<\/p>\n
Many individual investors, however, still regard stocks as too
\nrisky due the volatility of their prices.<\/p>\n
Alder said that fixed-income mutual funds, which is the most
\npopular mutual fund option so far, will not lose its allure
\ndespite the lowered bank interest rates.<\/p>\n
\"Besides, they are safer and their net return is higher than
\nthose provided by time deposits or savings,\" he said of the
\nadvantages of the fixed-income mutual funds.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/mutual-funds-remains-the-best-alternative-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}