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Indonesia 2017 AUM target hard to meet

Added 31st March 2015

High interest rates offered by Indonesian banks will likely undermine government targets to grow the AUM of the mutual fund industry to IDR1quadrillion ($75.5bn) by 2017 and reach seven million in investor count, according to a Cerulli Associates report.

Indonesia 2017 AUM target hard to meet

“Indonesians have been spoiled by the high interest rates offered by savings accounts in banks. Even high net worth individuals put the bulk of their money in savings accounts. The key challenge will therefore be to change this mindset-that is, to convert savers to investors,” the research firm said.

The report highlighted that out of a population of 250 million, fewer than 300,000 are mutual fund investors. 

Furthermore, mutual fund industry data suggests that the industry is largely dominated by institutional investors and high-net-worth individuals. 

“This is because, with total AUM of about IDR231.4trn at the end of 2014, each investor holds an average of IDR900m ($69,000) of mutual funds.”

In order to achieve the 2017 targets, Indonesia's Financial Services Authority has introduced initiatives that promote mutual funds to the mass retail public.

These include lowering minimum investment levels to help lower-income investors enter the market, as well as actively pushing for mutual fund road shows in office buildings, shopping centers, and universities. 

The research firm said it will be a challenging task for Indonesia to meet its targets by 2017, but sees the goals as a positive for the mutual fund industry in the long-term. 

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