The country’s largest mutual fund management company PT Schroders Indonesia is upbeat the industry will recover this year on the back of improving conditions in the capital market.

Schroders director Michael T. Tjoajadi said on Monday the value of assets under management would reach Rp 100 trillion (US$9.6 billion) this year, around the same level as the value in 2007, when the assets under management stood at Rp 91 trillion, then supported by a bullish market.

Last year, total funds managed by the industry dropped by almost 19  percent to Rp 74 trillion, according to mutual fund rating agency PT Infovesta Utama.

This was partly triggered by  the 50-percent plunge in the Indonesia stock market following negative sentiment from the regional market in response to the Wall Street financial collapse and global financial crisis in the United States and Europe.

But as the country’s capital market recovers, the industry has started to gain  some ground as indicated by recent data from Schroders showing that as of April, the total value of the assets under management in Indonesia was recovering and had now reached Rp 87 trillion.

“We hope the industry can reach Rp 100 trillion (in management) by the end of this year,” Michael said.

For Schroders alone, it now has total assets under management worth Rp 24.4 trillion as of April, or 19 percent higher than the value of assets managed in December 2008.

Schroders’ assets under management had however declined by 21 percent to Rp 20.6 trillion last year.

Michael said he was upbeat on the industry’s growth this year as the country’s macroeconomic indicators conveyed a more positive outlook than many other countries, whose economies were forecast to contract this year, following the global economic downturn.

“Investors will of course prefer the countries with positive GDP  (gross domestic product) growth rather than negative ones,” he said.

To support this growth, Schroeders has launched its sharia-based mutual fund with an asset allocation of between 5 percent and 79 percent for either stocks, sharia-based bonds and money markets.

The government has forecast the economy will expand by between 4 percent and 4.5 percent this year,  compared to last year’s 6.1 percent.

During the first quarter of this year, the economy grew by 4.4 percent, according to the Central Statistic Agency (BPS).

Dewi Fajar Mayang Sari of Infovesta Utama told the The Jakarta Post that the Rp 100 trillion target for this year was possible given the positive market indicators.

The main index of the Indonesia Stock Exchange has rallied 57 percent so far since the market collapse in October 2008. as returning global investors seek higher returns from emerging markets.

Chairman of the mutual fund managers association, Abiprayadi Riyanto said that the industry’s players had set a target of up to 20-percent growth this year as compared to last year on the back of a stronger capital market. “We are hoping the growth would be sustainable until the year-end.” (mrs)

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