T. Hidayat

T. Hidayat
Contributor
Jakarta

The government law number 8/1995 on capital markets issued in
1995 caused the proliferation of mutual fund companies in the
country. Within six months after the law came into effect, more
than 20 such companies made public offerings that exceeded 12.5
billion units.

However, the party did not last long. Toward the end of 1997
the country was hit hard by the economic crisis, which dwindled
the number of investors in this fledgling business.

Apart from decreasing the value of mutual funds products, the
economic crisis also hurt prices of shares and bonds. The new
mutual fund investors, partly due to lack of knowledge, panicked
and quickly sold out their equities. Mutual funds were no longer
attractive as, almost simultaneously, banks were offering sky-
high interest rates of up to 70 percent annually for deposits.
And that seemed the right place for almost everyone's money.

Although in the earlier days of growth, the mutual fund
business was hit by the economic crisis, its development on the
whole in later years, according to director of PT Schroder
Investment Management Indonesia Michael T. Tjoajadi, was
categorized as comparatively healthy due to its resilience. He
admitted that most Indonesians still preferred to keep their
savings in bank deposits, which is one of the hampering factors
for the growth of mutual funds. In developed countries, he said,
investments could be in various forms, including mutual funds,
bonds, shares and so forth.

However, this attitude is understandable as bank deposits are
guaranteed by the government, unlike investments in mutual funds.

The major players in this business soon realized that they had
to actively communicate to the public and "educate" them on the
benefits of investing in mutual funds. Hence, the massive influx
of not only advertisements, but also benefit-related news in the
media to focus on the uniqueness of such investments.

To invest, one does not have to wait until one has a lot of
money. Just like Robert T. Kiyosaki wrote in his book Guide to
Investing, a true investor does not wait until he is rich enough
to make investments. Investments of small amounts, like in mutual
funds, can start at any time. With only Rp 200,000 (about US$ 23)
one can purchase an equity of a blue-chip or well-established
mutual fund.

Today, various types of mutual funds are available on the
market. For rather adventurous investors after large profits,
stocks are suitable, while for the more moderate type there are
combined mutual funds or those with fixed returns. The lowest
risks are perhaps in the money market accounts.

"All kinds of investments, especially those that offer larger
profits, are prone to risks," said Michael. Investments in mutual
funds are indeed more profitable in comparison with the interest
rates of bank deposits, but behind the opportunities for making
more profits lie the equally possible risks, like the decrease of
net value. Quite a number of mutual funds between 1998 and 2000
experienced this kind of slump in their net value.

The mutual funds specializing in money market, which,
according to Michael, is a more secure form of investment
comprising Bank Indonesia's certificates and the country's major
banks' deposits. In view of the fact that mutual fund companies
handle huge amounts compared with any individual's deposit, the
rate of return is obviously much higher. Normally, this type of
mutual fund is the closest alternative to keeping money in bank
deposits.

Likewise, also preferred by most "cautious" investors are
mutual funds that deal with bonds, which offer a return of 20
percent annually.

Choosing which mutual funds to invest in is certainly not
easy. A few years ago, many people suffered losses in the
billions of rupiah from investments considered to be healthy.
However, especially since the end of 2001 or early 2002, things
have changed for the better, as most mutual funds in the country
have bounced back and provided returns that were much higher than
the interest rates of Bank Indonesia's certificates or even the
country's top bonds.

Apart from deciding on which mutual funds to invest in,
another important factor is the role of the fund manager that one
appoints to take care of one's investments. The track record and
style of investing of a fund manager are among the prerequisites
in selecting the right fund manager. Other features to be
carefully noted are the ease of the registration process, the
minimum amount to be invested, the amount of management fees and
other related services provided by the fund manager.

One of the world's leading financial services company,
Manulife, with 250 offices in 15 countries and over 30,000
employees worldwide, has even more to offer including via its
operations in Indonesia.

Manulife Aset Manajemen Indonesia, a part of such a huge
multinational financial services organization, has access to the
best independent research information to provide sophisticated,
customized investment solutions and superior investment
performance to its clients in Indonesia.

Its mutual fund products, categorized as among those most
sought after by investors and containing the most important
qualities such as flexibility, convenience and, above all,
transparency include: Phinisi Dana Saham (Equity Fund), Phinisi
Dana Tetap Pemerintah (Government Bonds Fund), Phinisi Dana
Campuran (Balance Fund), Phinisi Dana Kas (Money Market Fund),
Dana Tetap Instan (Treasury Management Fund) and Manulife
Pendapatan Bulanan (Monthly Income Fund).

Among the company's strengths is the team-based approach to
asset management that incorporates, among other things,
fundamental, quantitative and econometric models to structure
composites that meet the portfolio's policies, objectives and
risk profiles while aiming to match or even surpass the pre-
established investment performance goals.

With currently about 15,000 investors and mutual fund assets
under management standing at IDR 4.2 trillion -- both figures
expected to grow by the end of the year -- Manulife Aset
Manajemen Indonesia is one of the largest fund management company
in the pure-breed fund category. Its reputation is further
reinforced by ISO certification for high quality operations and
strict documentation procedures.

With the wide-ranging mutual funds available in the country
along with the enhanced services of related companies, most
investors' headaches are hopefully gone in view of the currently
more positive economic situation. So, turning to mutual funds as
an investment strategy has become a more natural alternative.