PT CIMB-Principal Asset Management, a subsidiary of Malaysia’s CIMB Group, launched on Monday an equity fund based on the IDX30, the new index recently introduced by the Indonesia Stock Exchange (IDX).
The equity fund, called the CIMB-Principal Index IDX30, will invest at least 80 percent of its managed funds in stocks included in the IDX30, a new benchmark that is a pared-down, select, version of the LQ45 or 45 most liquid stocks in the bourse. The list is updated every six months.
“CIMB-Principal Index IDX30 is the first equity fund using the IDX30. Apart from bringing a new product to the public, we’ve chosen the IDX30 because it can give better and more optimal returns,” company president director Reita Farianti said on Tuesday.
The IDX30 rose 0.04 percent to 374.74 on Monday compared to a day earlier, outperforming the main benchmark, the Jakarta Composite Index (JCI), which slipped 0.02 percent to 4,312.37.
According to figures from CIMB-Principal, the IDX30 gave returns of 22.52 percent during the June 4 to Oct. 31 period, better than the JCI’s return of 19.04 percent in the same period.
CIMB-Principal director Gunanta Afrima said that the IDX30 equity fund would be managed passively by the company’s fund managers, meaning that frequent changes in portfolio would be unlikely.
“So far, there are only about 25 percent of mutual funds actively managed that can outperform the index (JCI). Risks in IDX30 are more manageable,” Gunanta said.
Stocks in the IDX30 are selected based on liquidity, financial performance, market capitalization and companies’ business prospects.
The IDX30 also contains several underperforming stocks, however, including coal and nickel miners, that are suffering from the decline in prices of their products.
According to figures from the IDX, stocks of mining companies dropped 0.64 percent on Tuesday. The mining stocks have seen a decline of 25.96 percent year-to-date, data has shown.
Mining stocks are the worst performers this year and have taken off the shine provided by the massive increase in other stocks, particularly those of property, infrastructure and consumer goods, which have risen 40.76 percent, 30.56 percent and 20.08 percent year-to-date respectively, according to the bourse’s figures as of Tuesday.
In managing the CIMB-Principal Index IDX30, Reita said that her company would avoid putting a weight on commodity-based stocks.
“As it will be 80 percent in the IDX30, we can choose 24 performing stocks and put the remaining 20 percent in money market investments,” Reita said.
The company is expecting to gather between Rp 30 billion (US$3.12 million) and Rp 50 billion for the CIMB-Principal Index IDX30 before the year’s end.
It is also expecting that the equity fund will be able to provide returns in the range of 15 percent and 20 percent next year, along with the estimated increase in the JCI.