Mutual Fund Industry Loses Competitiveness, Managed Funds Will Decline in 2023

Jumat, 12 Januari 2024

KONTAN.CO.ID – JAKARTA. Funds managed by the mutual fund industry are observed to decline in 2023. Various pressures occurring in the market encourage investors to withdraw from mutual fund investments.

Based on data from the Financial Services Authority (OJK), the value of Assets Under Management (AUM) or managed funds as of December 29 2023 was recorded at IDR 824.73 trillion, with the Net Asset Value (NAV) of mutual funds recorded at IDR 501.46 trillion. During 2023, mutual fund NAV decreased 0.67% ytd, but still recorded a net subscription of IDR 8.98 trillion.

BNI Asset Management (BNI AM) Investment Director Putut Endro Andanawarih observed that the decline in funds managed by the mutual fund industry was mainly due to the reduction in AUM of stock mutual funds, protected mutual funds and money market mutual funds. There are several factors behind the decline in managed funds in this mutual fund asset class.

Putut said that regulatory changes in the insurance industry had resulted in many redemptions, especially in stock mutual fund products. Then, the risk off event along with high volatility and geopolitical tensions from external markets also had an impact on the domestic financial market.

Mutual funds also face competition from the crowding out effect that comes from the many issuances of government bonds with attractive coupons. And new instruments from Bank Indonesia (BI), namely SRBI and SVBI, have provided more competitive yields.

Putut observed, of the 8 types of mutual funds, managed funds in 4 types of mutual funds, namely Mixed, ETF, Fixed Income and Index, were observed to grow positively. And there are also 4 types of mutual funds, namely Mixed, Fixed Income, Index, and Sharia - Foreign Securities which grow from net flows (new subscriptions) and are not a result of market value growth.

In the last few years, Putut has seen that Index Mutual Funds have grown most significantly among other mutual fund products, namely at 12.10% CAGR from 2020 to the end of November 2023. It is important to know that CAGR is the annual growth rate over a certain period of time.

Meanwhile, Protected Mutual Funds fell significantly by around 9.33% CAGR due to the issuance of PP Number 55 of 2022 concerning Adjustments to Regulations in the income tax sector. Putut believes that this regulation means that large investors are not subject to tax on investments in bonds so that investing in bonds in mutual funds is no longer considered efficient.

"Apart from that, the issuance of PP No. 91 of 2021 has caused retail investors to be more interested in investing directly in bonds because the tax rate which was previously 15% has become 10%. "This figure is the same as mutual funds," explained Putut to Kontan.co.id, Friday (12/1).

Putut expects growth in managed mutual funds in 2024, possibly entering the fixed income asset class and stock index mutual funds. This optimism is considering that interest rates are expected to fall in 2024, so it is hoped that this can be a positive catalyst for increasing stock and bond prices.

Link. https://investasi.kontan.co.id/news/industri-reksadana-kalah-saing-dana-kelolaan-turun-di-tahun-2023