Indonesia sees rush of Islamic mutual fund products that can invest in offshore instruments

Indonesia fund management companies are readying to market Islamic/shariah-based mutual funds that will invest in offshore instruments.

This follows Indonesia’s regulation, announced late last year, that allows shariah mutual funds to use at least 51 per cent of their investment components in offshore instruments such as bonds and stocks.

The move is seen to allow investors an option to diversify their investments and deepen the country’s shariah mutual funds market.

In addition to this, the government also allowed these funds to invest up to 100 per cent of their shariah mutual funds units in overseas bonds.

With the change in regulations, a host of fund management firms have announced their plans to launch products that will invest in offshore instruments.

Schroder Investment Management IndonesiaBNP Paribas Investment Partners and Manulife Aset Manajemen Indonesia are some of the fund managers who are tapping the newly-opened avenue.

Others such as Bahana TCW Investment Management, a joint venture between state-run PT Bahana Pembinaan Usaha Indonesia and the Los Angeles-based Trust Company of the West (TCW) and PT Eastspring Investments Indonesia, part of UK-based Prudential Plc, are expected to follow suit.

Last year, fund management firm Aberdeen Asset Management has announced its plan to sell the first Islamic mutual funds with offshore assets.

“The potential is great because so far domestic investors can only invest in Indonesia. We are also considering to issue Islamic mutual funds in US dollar denomination in the first quarter of 2016,” president director and CEO of Aberdeen Sigit Pratama Wiryadi had earlier told DEALSTREETASIA.

Schroder Investment Management Indonesia has launched a global sharia-equity based dollar mutual fund called Schroders Global Sharia Equity Fund. Sharia Supervisory Board Member of Schroder Mohammad B Teguh Perwira explained that the Fund has leading edges, including variety of selected shares that comply with sharia principles.

“The public may no longer be hesitant about the selected shares in the product as they meet sharia principles,” he said, in a statement after launching of the product.

The company has appointed Citi Indonesia as custodian bank for the product. Citi Indonesia CEO Batara Sianturi said, the product provides opportunities for local investors to get access to the global capital market.

Securities firm PT BNP Paribas Investment Partners director and marketing head, Maya Kamdani Siboe said, their instrument would allocate 80 per cent to 100 per cent of its funds to invest in companies’ stocks in developed countries, such as the US, Japan and European countries, and would use the Dow Jones Islamic Market Index as its benchmark. BNP Paribas is hoping the new product will have up to $100 million assets under management.

As per the norms, the fund management companies can only invest in overseas sharia stocks issued by companies whose countries are members of the International Organization of Securities Commissions (IOSCO) and full signatories of the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (IOSCO MMOU).

The funds will be able to invest in member countries of the IOSCO in South and North America, France, South Korea and the United Kingdom.

Also Read : Indonesia Abeerdeen to launch Islamic mutual funds, eyes AUM $583.94m by 2019

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.