SBN Market Begins to Attract, Investment Opportunities in Fixed Income Mutual Funds

After several months of pressure, Indonesia’s bond market has begun to stabilise. The yield on 10-year government bonds has started to ease and stood at around 7.2% as of August 2026. Bank Indonesia held the BI-Rate at 5.75% in August 2026, which is expected to be the highest level this year, as a measure to maintain rupiah exchange rate stability amid the global strengthening of the US dollar.

For some investors who have long navigated the bond market, this kind of situation often becomes a long-awaited moment. The reason is simple: bond prices and yields move in opposite directions. When yields rise, bond prices fall — and that means the “buy” price becomes cheaper than before.

The question is whether this condition is truly an opportunity, or rather a danger signal that needs to be watched. To answer that, we first need to understand how the interest rate cycle works.

One of the most practical ways for retail investors to gain exposure to government bonds is through fixed income mutual funds. One example is BRI Brawijaya Abadi Pendapatan Tetap, managed by PT BRI Manajemen Investasi.

According to the Fund Fact Sheet as of July 2026, this mutual fund allocates the majority of its funds, around 98.15%, to debt instruments in the form of government bonds, with the remaining 1.85% in money market instruments to maintain liquidity.

Unlike buying SUN or ORI directly, which requires deeper technical understanding, this mutual fund allows investors to gain similar exposure with an affordable initial capital. It can be purchased with capital starting from Rp100,000 on the Bareksa app and without purchase or sale fees.

This product is worth considering for investors with a medium risk profile, who understand that investment value can fluctuate in the short term, but have a medium to long investment horizon to allow the market cycle to work.

To understand the logic behind it, imagine this. You buy a bond with a fixed coupon, say 6% per year. Some time later, new bonds are issued with a 7% coupon because market interest rates have risen. Automatically, the old bond you hold becomes less attractive compared to the new bond, so its price in the secondary market falls, so that its effective yield becomes equivalent to the new bond.

This is what generally happens when yields rise: the prices of bonds already in circulation fall to adjust. And that is what has recently been reflected in the performance of fixed income mutual funds.

However, this cycle does not move in one direction forever. Rising interest rates are usually a response to certain pressures — inflation, exchange rate weakening, or global uncertainty. Once these pressures ease, central banks typically begin to lower interest rates again. When that happens, yields fall, and bond prices that had been depressed turn around and rise.

This is where experienced investors see opportunity: buying or adding to bond allocations when yields are high means potentially getting a cheaper entry price, with potential for capital gains when the cycle reverses.

Another factor to understand is investment horizon. The longer a person’s investment timeframe, the greater the likelihood that the interest rate cycle will complete a full rotation — from rising, reaching a peak, then falling again. Investors with short horizons are more vulnerable to short-term fluctuations, while investors with medium-to-long horizons have more room to “wait” for the cycle to work in their favour.

One of the most common mistakes investors make is selling bond instruments precisely when yields are high — even though that means prices are at their cheapest point. This decision is often driven by short-term reactions to NAV that appears to be falling, rather than based on an evaluation of investment objectives and the time horizon set from the outset.

Before deciding to exit or instead add to an allocation, investors should ask themselves several questions: is this investment objective indeed for the medium-to-long term? Does near-term funding needs depend on this instrument? And is the decision being made based on data, or simply following daily market sentiment?

In other words, market momentum should be evaluated based on its alignment with the investment plan, not the other way around — an investment plan that keeps changing to follow daily market movements.

As an illustration, BRI Brawijaya Abadi Pendapatan Tetap recorded a performance of -2.93% year-to-date, in line with the pressure experienced by the bond market as a whole. However, when viewed over a longer period, this fund posted returns of 10.97% over 3 years and 22.28% over 5 years.

This data illustrates how instruments based on government bonds tend to go through up-and-down cycles in the short term, but historically still record positive growth in the long term. Assets under management of Rp69.82 billion as of July 2026 also reflect an investor base that has endured previous phases of the interest rate cycle.

When compared with its benchmark (80% INDOBex govies and 20% ATD), this mutual fund outperforms over the long term. Since its launch in February 2019, its performance has reached 47.89%, compared with the benchmark’s 29.12%.

From the portfolio side, the 10 largest assets of this mutual fund are diversified across various series of Government Debt Securities and Government Sharia Securities, such as FR050, FR0064, PBS030, and FR0108, all issued by the Indonesian government. Diversification across series and tenors helps manage risk compared with holding a single bond series directly.

The pressure currently occurring in the bond market — rising yields, a weakening rupiah, and a rising benchmark interest rate — is indeed real and needs to be taken seriously. However, for investors who understand how the interest rate cycle works, this situation is not merely a danger signal, but rather part of a recurring pattern in the bond market.

Ultimately, good investment decisions are born from an understanding of market cycles and alignment with each individual’s objectives and investment horizon, not from momentary reactions to red numbers. For investors with a medium-to-long horizon and a suitable risk profile, government bond-based instruments such as BRI Brawijaya Abadi Pendapatan Tetap can be one alternative for gaining diversified exposure to SBN.