'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)