PT Aberdeen Asset Management president director Sigit Wiryadi, second from right, during the signing of a deal between the company and brokerage firm Mandiri Sekuritas last week. (JG Photo/Dhania Putri Sarahtika)
Fund Manager Aberdeen Eyes Top-10 Ranking in Indonesia Within 5 Years
BY :DHANIA PUTRI SARAHTIKA & MUHAMAD AL AZHARI
OCTOBER 10, 2016
Jakarta. PT Aberdeen Asset Management, a local affiliate of a United Kingdom-based fund management firm, is eying a place in the top-10 league of the biggest fund managers in Indonesia in the next five years, as the company is ready to capitalize on the strength of its global office, further diversify its investment products, as well as extend its product reach to potential customers in the country.
UK-based Aberdeen Asset Management PLC – which as of March this year had about $420 billion in assets under management – opened the doors of its Jakarta office in 2014 through its local affiliate, marking the firm's official presence in the country.
According to PT Aberdeen Asset Management president director Sigit Wiryadi, the Aberdeen group is not a new player in in the country's financial markets as the global fund manager has been investing in Indonesian portfolio assets for more than three decades.
"Our London office has been investing since 1985. We have been buying shares of prospective publicly listed companies, one of which is Multi Bintang Indonesia," Sigit, a former president director of stock brokerage NISP Sekuritas and fund manager NISP Asset Management, told the Jakarta Globe in an interview on Tuesday last week (04/10).
He said the total exposure of the Aberdeen group in Indonesian portfolio assets stood at about between $4 billion and $5 billion.
PT Aberdeen currently has less than Rp 1 trillion ($77 million) in assets under management through a number of its mutual fund products. It ranks more than 30th among fund managers in Indonesia by the size of assets under management, but in the next five years, he said Aberdeen is seeking to be among the top-10 biggest fund managers in the country.
Sigit said Aberdeen's Indonesia investment teams are "fully integrated with the rest of the equity teams around Asia" to capitalize on the knowledge available in the group, which has been investing in Asian markets since 1992 and provided what he called solid research and a prudent investment process.
"At Aberdeen, we only ever invest in companies that we know inside out. No maybes, no second choices, and no compromises," he said.
PT Aberdeen, currently operating a main office in Jakarta and two branch offices in Bandung, West Java, and Surabaya, East Java, offers seven mutual fund products. These are: Aberdeen Syariah Asia Pacific Equity USD Fund, Aberdeen Indonesia Equity Fund, Aberdeen Indonesia Balanced Growth Fund, Aberdeen Indonesia Bond Fund, Aberdeen Indonesia USD Bond Fund, Aberdeen Indonesia Government Bond Fund and Aberdeen Indonesia Money Market Fund.
Its latest product, Aberdeen Syariah Asia Pacific Equity USD Fund, is a new Islamic-compliant fund that allows customers to invest in an overseas portfolio as the underlying asset.
Despite having just opened its Indonesian office in 2014, Aberdeen moved fast. The Jakarta-based fund manager established several strategic cooperation agreements with stock brokerage companies to expand its customer outreach.
Just announced last week, PT Aberdeen sealed a cooperation agreement with Mandiri Sekuritas, the brokerage arm of state-controlled lender Bank Mandiri, to allow its customers to buy three of Aberdeen's products – Aberdeen Indonesia Equity Fund, Aberdeen Indonesia Balanced Growth Fund and Aberdeen Indonesia Bond Fund – through Mandiri Sekuritas's networks.
Previously, PT Aberdeen also teamed up with stock brokerage Philip Securities Indonesia, to sell its products online.
Philip Securities is considered to have been successful in attracting customers to buy mutual fund products through its e-commerce platform.
In November 2014, Aberdeen's Singapore arm, Aberdeen Asset Management Asia Ltd, officially acquired Jakarta-based fund manager NISP Asset Management, thus bringing NISP's networks into the Aberdeen group.
Indonesia: Going for Growth
The global fund management company sees Indonesia as one of the few bright spots offering solid annual gross domestic product growth projections over the next five years.
Citing projections from the International Monetary Fund and data from Euromonitor International, Aberdeen sees the archipelago's growth potential as "undeniable" with the country offering annual GDP growth of around 6 percent for the next five years.
This view was put forward by Sigit when he presented a summary of Aberdeen's research about Indonesia to the local media last week.
Indonesia, with a population of over 250 million people, also offers solid economic fundamentals and attractive returns on equity where the country's best run companies – which have stayed lean and managed to preserve margins amid a recent fall in consumer demand – have delivered solid balance sheets, Sigit's presentation showed.
Furthermore, Aberdeen noted that Indonesia is making steady progress on reforms and efforts to improve infrastructure – factors that should bode well for the fund manager's long-term investment view.
Sigit's presentation also cited World Bank data in June 2016, showing that Indonesia has a high savings rate that provides a cushion against an uptick in household debt following a credit boom in recent years.
There are many other reasons that make Indonesia an attractive investment destination, including its strength as one of the world's top producers of natural resources, various government reforms, rising smartphone penetration and resilient automotive demand. However, the key driver of the country's development, according to Sigit's presentation, would be the projection that Indonesian consumers' disposable income would rise significantly in the next few decades.
This would be a good case to invest in some consumer-related stocks in Indonesia, such as Ace Hardware (a household store operator), Hero Supermarket (retailer), Mandom (cosmetics producer), Bata (shoemaker) and Unilever Indonesia (fast-moving consumer goods company).
Aberdeen cited Euromonitor's September 2015 research, which showed that Indonesian consumers' median disposable income would reach $11,300 per household by 2030, up from $6,300 in 2014; and also research from global management consulting firm AT Kearney that showed that Indonesia jumped to fifth place on the 2016 global retail index, up from 12th place in 2015, to back up its investment hypothesis.
However, despite all the positive news about Indonesia's growth prospects, Sigit said fund managers in Indonesia typically face the same challenge, which is to convince consumers to invest in non-bank products.
Indonesian consumers are known to still be "saving-minded," rather than "investing-minded" where the total assets of non-banking financial products remain dwarfed compared to the amount of money consumers put in bank deposits.
Bank deposits are seen as much saver investment instruments and less complicated for many Indonesians, compared to other investment products that offer higher returns.
"Our retail investors [in the stock market] are just about 250,000, while we have a population of over 250 million. The assets under management by the mutual fund industry are just about Rp 200 trillion, compared to about Rp 5,000 trillion worth of bank deposits. That is still way below the ratio in developed markets," Sigit said.
As a fund manager, Aberdeen has also been involved in promoting as well as educating customers about the benefits of investing in mutual fund products, which typically offer higher return than bank deposits.