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RI mutual funds reeling as rate hikes, regulatory changes bite
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Indonesian mutual funds are down some 10 percent this year, as global rate hikes and new domestic regulations push money elsewhere. (Shutterstock/JohnKwan)
Indonesian mutual funds are down some 10 percent this year, as global rate hikes and new domestic regulations push money elsewhere.
The sector’s net asset value dropped to Rp 521 trillion in October, Financial Services Authority (OJK) data shows, marking a more than 10 percent year-to-date (ytd) plunge, three times the drop that occurred in same period last year.
The OJK has recorded large numbers of investors pulling out of mutual funds, marked by a net redemption of more than Rp 61 trillion as of Oct. 25, dwarfing the Rp 4.85 trillion net redemption recorded last year.
Four of the five largest investment managers in Indonesia have seen their assets under management (AUM) drop between 11 and 31 percent ytd, according to the Indopremier investment app, collectively losing more than Rp 37 trillion in AUM.
Analysts say the drop was a result of interest rate hikes and policy changes regarding taxation and insurance brokers.
A new OJK rule that requires insurers to disclose the content of their portfolios, aimed at preventing embezzlement and other scandals that have plagued the industry, has caused insurance firms to move their funds over to the more transparent fund administration agreements (KPDs) from the previous mutual funds.
“Around a fifth of our mutual funds’ net asset value came from insurers. Now some have shifted their funds to KPDs, but more will follow. Mutual funds will continue declining until all [insurers’] funds are shifted to KPDs,” Wawan Hendrayana, deputy CEO at research and consulting firm PT Infovesta Utama, said on Thursday.
