'Protected' mutual funds help revitalize industry

'Protected' mutual funds help revitalize industry

The Jakarta Post, Jakarta

Amid a gloomy sentiment surrounding the mutual fund market, which
culminated in a massive redemption earlier in the month, some
investment management companies are stepping up efforts to lure
investors back by launching new, more attractive products.

Aside from offering relatively high yields, the firms also
offer so-called 'protected' funds to provide investors with a
sense of security over its paid-up principal funds -- the absence
of which helped lead to the massive redemption.

ABN-AMRO Assets Management on Wednesday introduced its
protected fund product -- Reksa Dana ABN-AMRO Indonesia Proteksi
Asia Surplus (AAI PAS) -- with a value of Rp 2.5 billion.

Under such a scheme, the value of funds invested by
participating investors is guaranteed by the firm and would
remain flat until it matures.

The product will officially hit the market in the next few
days, pending approval from the Capital Market Supervisory Agency
(Bapepam).

"The product is created for people who know what they want
from their investments but do not necessarily have the time to
deal with the hectic market," President director, Rima N.
Suhaimi, said in a media statement.

The company's brochure states that the funds would be invested
in FR002 series of government bonds, as well as in the money
market focusing on the purchase of four Asian currencies, namely
Korean won, Chinese yuan, Singapore dollar and Indian rupees.

Offering a net profit of 6 percent to 12 percent per annum,
the funds will mature on June 15, 2009, with a lock-up period of
one year, from Oct. 25 to the corresponding date next year, the
brochure says.

Earlier in the week, Schroeder Investment Management Indonesia
(SIMI), also launched its first protected mutual funds --
Schroeder Fixed Maturity Plan (SFMP) -- worth up to Rp 1
trillion.

"This product offers 100 percent protection to investors'
principal fund until it matures," said SIMI president director
Ronni Gandahusada at a media gathering earlier in the week.

According to Bapepam, aside from these two, four other firms
have also asked for approval to launch similar products, in a
sign of revival of confidence in the industry.

The firms are SIMI, PT Trimegah Securities, PT Fortis
Investments, PT ABN-AMRO Assets Management, PT Bahana TCW
Investment Management, PT PNM Investment Management, and PT
Bhakti Securities.

"As of Sept. 24, we have received requests from seven firms to
issue protected mutual funds. Hopefully the products will help
revitalize the industry in the near future," said Bapepam head
for investment and research Freddy Saragih.

Bapepam data shows that the value of mutual funds sharply
declined from over Rp 100 trillion on Dec. 30 last year to about
Rp 30 trillion as of Sept. 22, with about Rp 30 trillion worth of
funds being redeemed in early September alone.

Fortis Investments has announced plans to issue a relatively
similar product next month, called Fortis Equitra.

"What differentiates this product from others is that it has a
floor limit, or a minimum threshold of 95 percent of investors'
net assets value by the end of the year.

"That means that every year we will set 95 percent of the
investors' total assets value as a basis to determine a minimum
gain for them," said president director of Fortis Investments Eko
Priyo Pratomo.

Fortis Equitra will be launched on Oct. 10 at a nominal size
of Rp 1 trillion. (006)