Jakarta, August 20th, 2019 – The yield on Indonesian Government Bonds is one of the most attractive in the world. Moreover, at this time Indonesia has just gained of 1 (one) notch above the investment-grade from S&P to BBB with a stable outlook which illustrates that Indonesia has strong economic growth prospects. Other rating agencies such as Moodys and Fitch have also placed Indonesia at an investment-grade level.
However, the twin deficit conditions faced by Indonesia are the cause of the high-risk premium for holding Rupiah-denominated instruments. This is reflected in the wide difference between yields between Rupiah-denominated SUN and USD-based SUN. The high volatility of the exchange rate often makes investors tend to choose to invest in Indonesian Government Bonds with USD denominations to minimize the risk of Rupiah depreciation. Of course, not all investors can invest in USD-denominated SUN because a very large nominal investment is required to make a purchase.
PT Mandiri Manajemen Investasi (“Mandiri Investasi”) provides solutions to investors who want to hedge and diversify Rupiah-based assets by launching Rupiah-based Bond Fund products, where most of their assets will invest in USD-denominated SUN. With this product, investors are expected to achieve optimal results both when the USD and bond prices strengthen (All-Weather Fund). The product is Reksa Dana Mandiri Investasi Obligasi Nasional.
The Mandiri Investment Bonds National Mutual Fund is a Rupiah-denominated Fixed Income Mutual Fund that has an investment policy of 80% -100% in Bonds and 0% -20% in Money Market Instruments. The new Mutual Fund, which was launched last July 30th, 2019, has very interesting features. The first is that Mutual Funds can provide optimal flexibility during various market situations through their extensive investment policies to be able to invest in Indonesian Government Bonds both in USD and in Rupiah denominations. The second is that these Mutual Funds include Fixed Income Mutual Funds with low credit risk because these Mutual Funds invest in Indonesian Government Bonds.
In the last few years since the Fed implemented a tapering off policy, capital markets in developing countries including Indonesia experienced high volatility. This is caused by differences in growth prospects between developed and developing countries, reflected in the return of foreign capital flows from developing countries to developed countries, especially the United States, which is also followed by a weakening exchange rate of developing countries. The same thing also happened in Indonesia, where the Rupiah exchange rate has weakened since 2013. In that period, we saw a positive correlation between the movement of the Rupiah exchange rate against the JCI movement and the Rupiah bond index. When the Rupiah strengthens, it is usually followed by a strengthening of the Jakarta Composite Index and the bond market, and vice versa when the Rupiah weakens and is also followed by a weakening of the Jakarta Composite Index and bond prices. So that the USD-based instrument becomes one of the asset classes that can be used as an instrument for hedging.
In this regard, the purpose of investing in this Mutual Fund is to invest in USD-denominated Indonesian Government Bond instruments as the main strategy and can invest in Rupiah-based state bonds if needed. So that the Mutual Fund is expected to be able to take advantage of the momentum of the current market conditions to get optimal performance.
This product can be an investor’s choice to deal with all market conditions both when the market conditions are bearish and bullish as well as for investors who have investment needs in USD through the Indonesian Government Bond instrument.
As of July 2019, Mandiri Investasi has achieved Asset Under Management (AUM) of Rp.49.4 trillion. Meanwhile, the total managed funds, including the Limited Participation Mutual Funds and the Management of Individual Customer Funds, as of July 2019 reached Rp 56.5 trillion.
Mandiri Investasi keep commit to grow better and continue to develop capabilities, in line with Mandiri Investasi’s vision to become “The Most Innovative and Leading Asset Management Company in Indonesia”. Mandiri Investasi continues to provide investment solutions with innovative products along with optimal results to meet the needs of Investors.Share It :