Facing Political Year 2024, Investors Are Urged To Diversify To Mutual Index Funds

Capital market illustration (Photo: dock. Antara)

JAKARTA - Investors are considered necessary to diversify investment in the capital market on mutual index funds. This is claimed to have a measurable risk as well as a more optimal investment return rate.

Mirae Asset's Head of Fund Services, Francisca Gerungan, said investment in index mutual funds is one of the solutions to invest in dealing with increasingly heated political and security turmoil, global macroeconomics towards the end of the year, and facing the political year in 2024.

"Therefore, we invite investors to be able to diversify their investment in mutual index funds so that they can follow or mirror the stability and benefits of the stocks in their index," said Cika in Media Day: October 2023 in Jakarta, Tuesday, October 17.

Cika said that mutual index funds are mutual funds whose fund management is invested in the effect in accordance with certain indexes that are used as references.

From investment management, investment managers carry out passive management. Therefore, its performance is expected to get investment returns similar to the reference index.

Cika explained that based on OJK data as of early September, mutual fund management or asset under management (AUM) of mutual fund funds in the mutual fund industry reached IDR 13 trillion, being part of the total AUM of IDR 515 trillion. The total AUM figure of the industry fell 8 percent compared to last September (YoY).

In the midst of positive growth in the industry, the value of mutual funds administration by Mirae Asset under administration (AUA) Mirae Asset has also grown higher than the industry, which amounted to 60 percent to around IDR 1.5 trillion since the beginning of the year.

In addition to the increase in AUA, Mirae Asset also managed to increase the number of mutual fund investors by 62 percent to 27,000 accounts in September YoY, bigger than the growth of 20 percent of national mutual fund investors.

Cika said the performance improvement came from education and socialization which was intensively carried out both offline and online, along with marketing strategies.

"In the future, we will continue to provide education and socialization regarding mutual index funds as an investment diversification option so that customers can have a balanced portfolio because Mirae Asset customers have a more aggressive risk profile," said Cika.

Along with this effort, Mirae Asset will continue to improve service quality in line with the growth of AUA mutual funds in companies that apply as agents selling mutual fund securities (APERD) and in the Indonesian capital market.

Head of Investment Specialist of PT Syailendra Capital Teguh Bagja S, said that one of the mutual index funds that investors can choose is the Mutual Fund for the Syailendra MSCI Indonesia Value Index Fund Class A which follows the MSCI Indonesia Value index which contains value stock.

The value stock is a company whose share price in the market is still cheaper than the intrinsic value of the company.

Teguh said the decline in stock prices tends to be faster than the decline in the performance of stock issuer issuers, and value stock has the opportunity to grow fundamentally even though the market is correcting.

"Investments on value stocks are expected to have a more consistent performance in the long term in terms of good corporate fundamentals and dividend potentials that will be provided by issuers of value stock," he said firmly.

According to Teguh, because of the unique investment character, Syailendra MSCI Indonesia Value Index is estimated to be able to make better gains (returns) than JCI.

Teguh said that in the final range of 2022 to September 2023, Syailendra MSCI Indonesia Value reached 11.3 percent, while the JCI only posted a return of 1.1 percent.

In the MSCI Indonesia Value, currently there are 12 value stocks that are constituents, namely ADRO, ASII, BBNI, BBRI, BMRI, BRPT, INDF, INKP, TLKM, UNTR, UNVR, and SMGR.

Mirae Asset Head of Investment Information Martha Christina added that since the beginning of the year, nine of the 15 thematic indexes on the stock exchange have recorded better performance than the JCI.

According to Martha, index mutual funds can be a diversified choice, especially when the market is in turmoil. Currently, market participants' attention is still on the Palestinian-Israeli conflict and the price of petroleum and other commodities, as well as the inflation rate and the growth of the US economy.

"We believe that market conditions will be more normal at the end of the year ahead of window dressing", he explained.

Historically, Martha noted that the JCI almost always strengthens in the fourth quarter every year, especially regarding the momentum of window dressing activity.

Throughout October and December in the last 10 years, the JCI scored an average return of 2.1 percent and 2.6 percent.

Martha said this year the JCI is predicted to reach 7,400 by the end of the year with 10 ACES, AKRA, BMRI, CPIN, EXCL, HRUM, INTP, PRDA, and UNTR selected shares.