Indonesian mutual fund investors have blinkered outlook: Analyst
Indonesian mutual fund investors have blinkered outlook: Analyst
The Jakarta Post, Jakarta
The Indonesian mutual fund industry will continue to struggle as
long as most investors maintain a short-term investment horizon,
according to the head of research at Mandiri Sekuritas, Kahlil
Rowter.
"People go in and out of mutual funds frequently. Whenever
there is a (negative) price movement, they redeem their funds,"
said Kahlil at a recent seminar on mutual funds hosted by the
Chartered Financial Analysts of Indonesia and PT Mandiri
Manajemen Investasi.
He said many investors held mutual funds for just a month
before redeeming them and reinvesting the proceeds in either bank
deposits or different mutual funds with higher returns.
"It is more like trading than investing," said Kahlil.
Last year, fund managers held their portfolios for less than
70 business days on average, compared to an average turnover rate
of 230 days in the United States.
According to data from the Capital Market Supervisory Agency
(Bapepam), as of May there were more than 300,000 mutual fund
investors holding over Rp 82 trillion worth of funds.
This is down from the all-time record of Rp 110 trillion
reached in February.
Kahlil said that although the drop was initially triggered by
fears of inflation and an expected increase in interest rates, it
was exacerbated by the herd-like behavior of short-term
investors.
Kahlil said shifting investors' horizon to the long term would
be a difficult task.
"Indonesian investors are very averse to uncertainty and big
risks. Also, there is a lack of transparency and legal
certainty."
The head of research and investment management of Bapepam,
Freddy Saragih, said his agency was not obliged to try and turn
people into long-term investors.
"How can we educate them? We do not have the money or the
experience to change people's views," said Saragih during the
seminar.
Saragih said Bapepam was actively taking steps to increase
public confidence in mutual funds, including forcing fund
managers to apply marked-to-market pricing to establish their
daily net asset values.