In January 2010, total NAV of mutual funds in Indonesia amount to Rp 110.29 trillion. In September 2016, the number amounts to Rp 306,17 trillion. Total NAV increase steadily at average of 15.54% annual growth rate in the period, mostly due to increase in the number of investors and increase of the funds itself. Meanwhile, number of unit grow 18.67% each year from 2010-2016. Total NAV growth is shown in figure 4.1.
Figure 4.1 Total NAV of Mutual Funds in Indonesia
The growth rate has been increasing since 2013, as shown in figure 4.2. I expect the growth rate to be steady in 25-30% growth rate as in 2016 due to OJK willingness and goal to have 5 million investors in 2020. With the base expectation of 25% growth in the next four years, total NAV is expected to be around Rp 747.49 trillion. Recent tax amnesty program would also boost the total asset value of equity mutual funds, fixed income funds and REITS, as investors seek for yields. OJK financial literacy program also enhance people awareness of investing in mutual funds and stocks in general, although the coverage is still minimal.
OJK has a target to have 1% Indonesian population as investors, equivalent to 5 million investors from currently 520.443 investors. If we assume that NAV/investor is constant in the future, 5 million investors would yield total NAV of Rp 1.470,72 trillion. I believe OJK target is too optimistic, to achieve 5 million investors by 2020, total asset value has to increase 148% each year for the next 4 years. My assumption in the previous paragraph is more realistic, 25% annual growth rate in the next four years.
Figure 4.2 Total NAV Growth Rates of Mutual Funds in Indonesia
Number of mutual funds investors has been increasing at 5% annual growth since 2008, and I expect it to grow at similar rate in the future. Therefore, in 2020 number of investor is expected to be around 632.602, increasing from currently 540.443. My assumption is based on the difficulty of broadening the investor base by OJK despite the increasing socialization program to schools and universities.
Figure 4.3 Number of Mutual Funds Investors
Figure 4.4 Mutual Funds by Category 2016 (IDN)
Composition of the mutual funds in Indonesia could broadly be categorized as in figure 4.4. The mix of composition changed only slightly from year-to-year, with equity (31.3%) fund as the largest category, followed by mixed funds (equity and fixed income) as the second largest (31%). Fixed Income is in the third position with 23% of total funds assets, while money market, syariah, and ETF comprising less than 15% of total assets.
I expect the composition mix of mutual funds wouldn’t change dramatically, although there has been increasing interest on ETF products. Equity, fixed income, and mixed funds would still garner most of the investor interest. Meanwhile, money market would still cater company’s excess funds beside time deposit. I expect syariah fund to be lagging in the future due to the lagging average performance from time-to-time, and only attracts small market size.
Figure 4.4 Compositions of Mutual Funds in Indonesia 2016
Figure 4.5 Breakdown of Mutual Funds Composition in Indonesia 2016