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May 2021
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Indonesia mutual fund assets down in first quarter as bond yields rise, rupiah weakens

Stock funds fell 3.19% quarter-on-quarter to 123.71 trillion rupiah and bond funds edged up 0.27% to 141.28 trillion rupiah
By Goh Thean Eu   
April 15, 2021

Indonesia’s fund management industry assets fell 1.39% in the first quarter as stocks funds declined amid rising bond yields and a weaker rupiah.

The industry had 565.87 trillion rupiah (US$40.66 billion) of assets as of end-March, down from 573.54 trillion rupiah on December 31, 2020, according to latest figures published on the website of the Financial Services Authority of Indonesia.

The regulator typically posts the data without providing analysis.

Stock funds fell 3.19% quarter-on-quarter to 123.71 trillion rupiah while bond funds edged up 0.27% to 141.28 trillion rupiah.

The decline in stock funds was primarily caused by foreign investors cutting their exposure to emerging-market equities to move into safe haven assets, according to a portfolio manager at an Indonesian fund management company.

“Foreign investors are reducing their exposure to Indonesia due to the rising US Treasury bond yields and weakening rupiah. With the recently-announced $3 trillion infrastructure plan by President Biden, we can expect the dollar to continue to strengthen and yields continue to rise,” the Kuala Lumpur-based fund manager tells Asia Asset Management, speaking on condition of anonymity.

Capital protected funds, which are funds that guarantee investors their initial investment plus any capital gains, provided they are held for the full contractual term, were up 1.85% to 147.99 trillion rupiah.