Schroder targets to manage Rp 68 trillion this year

The nation’s biggest fund manager, PT Schroder Investment Management Indonesia, sees more opportunity for gains in Indonesia’s equity market this year as expected higher corporate earnings will further drive share prices higher.

The local flag of top British fund manager Schroders Plc. targets Rp 67 trillion to Rp 68 trillion (US$7.6 billion) in assets under management (AUM) this year, an 8 to 10 percent increase from Rp 62.3 trillion last year, Schroder Indonesia’s president director Michael Tjoajadi said on Thursday.

“We are expecting the increase from new sales and an upward market price,” he told reporters. “We might not launch new products. We relatively have all kinds of products. Now it’s a matter of selling and performing better.”

Schroder Indonesia, which has the biggest market share of 37 percent of overall local fund managers’ AUM, currently offers 12 mutual funds products, ranging from the money market and fixed income to equity and balanced funds, according to its website.

Schroder Dana Mantap Plus II, the manager’s fixed income fund mostly invested in bonds, was among fixed income funds’ top performers last year, gaining 17.4 percent throughout 2011.

“It will be difficult to see Indonesian government bonds significantly gaining like last year to repeat last year’s gains,” Michael said. “I think there’s a chance for equity funds to outperform bonds this year.”

He recommended investors maintain balanced funds with holdings in stocks of companies that are not dependent on exports, and those that survived the 2008 crisis. Their shares are generally cheap and have good fundamentals, Michael said.

Still, he added, the lingering eurozone debt crisis will affect capital markets anywhere in the world, especially in Indonesia where foreign funds dominate ownership by 60 percent in the stock market.

“We will still see volatility in the stock market; it will always happen at least until the first half of this year. Europe’s woes must be settled to give a good impact on the market,” Michael said, urging investors to gear up for a mini-crisis on unexpected news from the Western hemisphere.

Mutual funds’ movement is normally in line with that of the stock and bond indexes.

The benchmark Jakarta Composite Index (JCI) for stocks traded on the Indonesia Stock Exchange (IDX) last year peaked to a record high of 4,193 before the news of the worsening eurozone debt woes prompted sell-offs worldwide to make the local index gauge dip 28.3 percent.

The index managed to end 2011 in the black with a slight gain of 3.2 percent, making it the world’s third top performer.

“Indonesia is considered interesting because of the average 20 corporate earnings, driving up earnings per share, which is higher than other countries in the world excluding India. And the recent ratings upgrade to investment status opens a wider market,” Michael said.

New policies affecting business earnings would create market shocks because of the relatively high valuation of Indonesian stock prices, especially blue-chip ones. The JCI’s price-to-earnings (PE) and price-to-book value (PBV) ratios were at 12.4 and 2.5 percent, respectively, as of Thursday, stock exchange data shows.