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IPIM’s new ETF fund tracks 15 largest companies on local stock exchange
The “Reksa Dana Premier ETF MSCI Indonesia Large Cap” fund is the third ETF listed on the Indonesian stock exchange this year and the 41st ETF overall.
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Trade Minister Agus Suparmanto (‘center’) presses the button to officially close the year’s last day of trading on the Indonesian Stock Exchange (IDX) in Jakarta on Dec. 30, 2019. (JP/Dhoni Setiawan)
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T Indo Premier Investment Management (IPIM), a subsidiary of PT Indo Premier Sekuritas, listed another exchange-traded fund (ETF) on the Indonesian Stock Exchange (IDX) on Wednesday.
IPIM director Noviono Darmosusilo said in Jakarta that the ETF fund, called the “Reksa Dana Premier ETF MSCI Indonesia Large Cap”, was the third ETF listed on the stock exchange this year and tracked the performance of the MSCI Indonesia Large Cap Index which consisted of the 15 most liquid stocks on the IDX.
“From the 600 companies listed today on the IDX, we took the 15 largest companies and most liquid stocks with a capitalization value representing no less than 70 percent of the free-float adjusted market capitalization of the Jakarta Composite Index,” Noviono said following the listing of the company’s ETF on the exchange.
“We know there are the IDX 30 [and] LQ45, [which act] as reference indexes to form the core of a portfolio. Well, the MSCI Indonesia Large Cap is the core of the core,” he added.
The IDX 30 index measures the performance of the 30 stocks with the largest market capitalization on the IDX and the highest transaction volume, selected from the constituents of the LQ45 index. The LQ45 index tracks the top 60 companies with the highest market capitalization over the last 12 months, among other indicators.
Of the 41 ETFs listed on the IDX, 12 belong to IPIM, which means that IPIM’s ETF products make up almost 30 percent of ETF products traded on the IDX.
The company, which was one of the first companies to offer such capital market instruments in Indonesia, added its previous ETF product over a year ago when it listed “Reksa Dana Indeks Premier ETF Pefindo i-Grade” on Dec. 21, 2018.
Noviono told reporters on Wednesday that there were three to four new ETF products to come this year, further expanding the contribution of ETFs to the company’s assets under management (AUM).
“The contribution of our ETF products to the total AUM right now is approximately 75 percent,” Noviono said.
With the launch of IPIM’s newest fund, the IDX has seen three new ETF listings this year. Last year, 14 ETFs were listed on the IDX.
“We hope that this ETF can diversify investment options, which are needed by today’s investors, who are becoming more diverse,” IDX assessment director I Gede Nyoman Yetna said in his opening remarks on Wednesday.
He added that IPIM, as a market leader in the issuance of ETF funds, could act as a reference for other fund managers to offer attractive ETF products that could help grow the ETF market in Indonesia.
An ETF is a collection of securities, consisting of stocks or bonds, that tracks an underlying price index in the stock market.
Despite being similar to a mutual fund, an ETF differs, in part, because it is traded like an ordinary stock on the stock exchange.
ETF share prices fluctuate during the trading day in accordance with the market, while the prices of mutual funds are based on the day’s closing price. (ydp)
