M

andiri Manajemen Investasi (MMI), an investment management company, is eyeing 40 percent growth in its total assets under management (AUM) this year, supported by thriving equity-based mutual funds and ongoing improvement in the Jakarta Composite Index (JCI).

MMI, part of publicly listed Bank Mandiri, hopes to see its total AUM stand at around Rp 27 trillion (US$2.3 billion) by the end of 2014, up from the Rp 19.29 trillion booked last year, according to MMI president director Muhammad Hanif.

'€œWe are optimistic we will reach the target because the business potentials are huge. In February, our AUM has already reached Rp 21.6 trillion,'€ he said on Monday.

MMI data reveals that equity-based mutual funds remain the most preferred product, accounting for 35 percent of the total AUM.

Meanwhile, the rest of the AUM consists of protected funds (22 percent), money market funds (20 percent), fixed-income funds (15 percent), discretionary funds (7 percent) and balanced funds (1 percent).

'€œWe expect to see equity funds continue to dominate the AUM portfolio, making up 40 to 45 percent of the total, as we estimate that the index [JCI] is on the right path. We believe that it will reach the 5,000 level again this year,'€ Hanif added.

The JCI, the main benchmark of the Indonesia Stock Exchange (IDX), went through a rough patch last year, following reports last May that the US Federal Reserve would soon reduce its stimulus package.

It resulted in the JCI plunging to 3,967.84 on Aug. 27, 2013 '€” its lowest level throughout the whole year '€” even after the index recorded its highest point at 5,214.98 just three months earlier. The JCI then slowly picked up and ended at 4,274.18 on Dec. 30, 2013, unable to surpass the 5,000 level again.

However, Mandiri Sekuritas equity research and strategy head John Daniel Rachmat said that 2014 would be different from last year, as reflected in the latest data.

'€œFor the past four months, we'€™ve been looking at improved economic data in our current account, trade balance, forex [foreign exchange] reserves and inflation. They back our conviction that the index will surge to at least 4,800 in April,'€ he said.

According to data from Bank Indonesia (BI) and the Central Statistics Agency (BPS), Indonesia has indeed been showing encouraging economic results. During the last quarter of 2013, the economy rose to 5.72 percent from 5.63 percent in the previous quarter, leading to an overall 5.78 percent in its gross domestic product (GDP) growth.

The current-account deficit (CAD) also narrowed in the same period, down to 1.98 percent of GDP from the 3.85 percent reported in the third quarter and much lower from the historic high of 4.4 percent in the second quarter.

'€œOur scenario says that the JCI may surge 6 to 7 percent to 4,550, but it passed that level already. So we predict that it may reach 5,550 this year, provided that we elect a market-friendly president,'€ John said, referring to the July 9 presidential election.

On Monday, the JCI closed at 4,623.57, down 0.5 percent from Friday. Year to date, the index has so far grown 6.8 percent.

Meanwhile, Hanif said that part of the MMI'€™s growth target this year would also be supported by its business in Singapore as it was looking to launch its first mutual funds product in the country in March.

'€œWe will begin by launching fixed-income funds and then expand to offering a more specific product, such as RDPT [limited participation mutual funds], in the second quarter,'€ he said.