Danareksa launches new product for cautious investors

Anissa S. Febrina, The Jakarta Post, Jakarta

State investment and securities firm PT Danareksa launched on Monday a new protected mutual fund, called Danareksa Proteksi, aimed at increasingly conservative investors.

The mutual fund offers a one-year maturity period and a 12- percent yield.

"We are discouraging investors to redeem their investment before it is due, by charging them penalties if they do so," Danareksa director Priyo Santoso said.

The launching of the mutual fund was a response to the recent surge of customers pulling their money from mutual funds after several high-profile collapses in the sector.

The fund aims to absorb a minimum investment of Rp 50 million (US$5,000) and is offered from Nov. 14 through Dec. 2. It will mature on Dec. 8, 2006.

Should investors wish to redeem their investments earlier, they can do so after three months but will be charged a redemption fee of 5 percent. "We will add the collected fee to the total fund and thus those who stay until the end of the period will benefit more," Priyo said.

Danareksa plans to invest 90 percent of the collected funds in A+ rated state obligations and the rest on A to BBB rated obligations.

"Now is the best timing to offer this relatively-safe protected fund as inflation rates will correct the value of obligation," he said, adding that the company would try to keep redemption at a maximum 10 percent of its monthly net asset value.

Danareksa, a fund manager, has a current net asset value (NAV) of Rp 1.5 trillion after booking a record high NAV of Rp 10.5 trillion in March.

Today's national mutual fund net asset value stands at Rp 30 trillion. The figure is a far cry from the Rp 111.13 trillion posted in January, according to Capital Market Supervisory Agency (Bapepam) data, in what the agency said was a result of a vast imbalance in the amount of redemptions and new subscriptions.

Market players and analysts say the massive redemptions were triggered by collapse of trust in fund managers that will be difficult to restore.

Time deposits currently offer up to 15 percent interest rates, while fixed-income mutual funds only offer about 8.5 percent. Most of the country's actively traded mutual funds use government bonds as their underlying assets.

The industry, which started to develop five years ago, had earlier seen tremendous growth in investable funds managed by securities houses, which rocketed from just Rp 10.25 trillion in 2003 to Rp 124 trillion early this year.

However, recent scandals -- such as security firms have carried out mis-sellings, using their investors' fund for something not in line with their prospectus and manipulate some key information to their investors -- meant that consumer confidence in the sector has collapsed.