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The latest boom in Indonesia's mutual fund industry is
expected to continue this year amid high hopes of further falls in
interest and inflation rates.
Fortis Investment, an investment fund manager, estimates that
Indonesian mutual funds, which booked record growth of 79.2 percent in
2006, would grow by a further 30 to 40 percent this year.
"We hope the growth will be even higher than our forecast. In 2006, the
growth was far higher than the 20 percent we predicted," Eko P.
Pratomo, president director of PT Fortis Investments, told reporters
Tuesday.
In addition to improvements in the macro economy, the introduction of
new regulations governing mutual funds by the Capital Market and
Financial Institutions Regulatory Board (Bapepam-LK) are also expected
to fuel further growth, said Eko.
Up to the end of 2006, according to data from Bapepam-LK, total assets
under the management of the country's mutual fund industry reached Rp
50.8 trillion, or 79.2 percent higher than the 29.17 growth recorded in
2005.
The increase resulted mainly from the rapid growth in protected funds,
which were first launched in 2005, and which recorded growth of 282
percent during 2006.
"The introduction of the protected fund came at the right time, after
the 2005 turmoil in fixed income funds," said Eko.
The rapid growth in mutual funds was also greatly helped by the
country's booming stock market last year. The decline in inflation and
interest rates, which began at the beginning of the second semester of
the year, resulted in the shifting of funds from the banks to the
equity market.
The Jakarta Stock Exchange's Composite Price Index gained more than 50
percent in 2006 to close the year as the world's third best performing
stock market
Besides protected funds, money market funds grew by 82 percent, equity
funds by 67 percent, balanced funds by 56 percent and fixed income
funds by 45 percent.
Eko said that the significant growth in the overall mutual fund
industry was a good sign as it would result in a more balanced growth
composition. He said he expected there would be more new mutual fund
products this year.
He added that PT Fortis Investments would focus on protected funds,
balanced funds and equity funds this year.
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