Bareksa – one of Indonesia’s investment portal startups that synthesizes a trading platform for mutual funds with applicable editorial content and widgets for novice investors – took its mutual fund marketplace live today.
The mutual funds on Bareksa come from eight investment managers – both local and foreign – including CIMB-Principal Asset Management, Trimegah, Sinar Mas, Ciptadana, SucorInvest, andMega Asset Management.
“It is the first integrated online marketplace for mutual funds in Indonesia,” explains Karaniya Dharmasaputra, founder and CEO Bareksa. “On the Bareksa platform, users can simultaneously access the information, analysis, news, data, and financial widgets, as well as buy and sell mutual funds online.”
To manage the marketplace, Bareksa has appointed Buana Capital, a securities company member of the Indonesia Stock Exchange (IDX). During the month of January, Bareksa will have a total of 47 mutual funds available on its marketplace. Currently, the funds available for trading on Bareksa include equity, mixed, fixed-income, money market, index, and Islamic mutual funds.
“Some other investment managers, both foreign and local, are conducting due diligence on our platform at the moment and have committed to join immediately,” says Dharmasaputra, who remains confident that Bareksa’s offerings are sure to grow.
Deposits vs mutual funds
Dharmasaputra hopes his mutual fund marketplace can also shift the mindset of Indonesia’s fiscally conservative society away from saving and toward investing. “It is not the time anymore to think that saving or depositing money into the bank will double our savings,” says the the founder and former CEO of local news portal VIVA. “Indonesia will definitely move to follow the path that has been taken by developed countries […] And the internet will be the accelerator.”
Last year’s bank deposit interest rates eroded due to inflation, according to Bareksa, and deposit rates are now well below the returns of mutual funds in Indonesia. Dharmasaputra says that in 2014, the index of mutual funds and the Sharia Stock Index on the IDX generated returns of about 24 percent.
Meanwhile, the average deposit rate at state banks during a 12-month period delivered an 8.7 percent return (based on October data from the Bank of Indonesia).
Karaniya Dharmasaputra, founder of Bareksa.
Dharmasaputra argues that investing in mutual funds is also a better option because bank deposits in Indonesia are subject to an income tax of 25 percent plus administrative costs for the banks themselves. With the extra costs factored in, he says that deposit interest really only earned about 6.52 percent last year for those who squirreled their cash away in banks.
Potential of online investment
Currently, the penetration of general investment in Indonesia is still low. According to data from the Financial Services Authority, the total amount of money in local mutual funds was around Rp 192.5 trillion (US$15.4 billion) in recent years. Compared to other nations, that figure is still small. Dharmasaputra explains that it was only about two percent of Indonesia’s overall GDP. In the US, for example, the amount of money in mutual funds has reached 82 percent of the country’s GDP.
Dharmasaputra estimates only about 162,000 people have made an investment in Indonesian mutual funds. That is only about 0.07 percent of the population.
This year the government expects the number of investors in the capital market to reach one million people, according to Bareksa. To that end, the use of trading via the internet will be seriously encouraged. Last year, the number of internet users in Indonesia reached 83.6 million. Dharmasaputra says he is encouraged because that figure is expected to increase to 93.4 million or approximately 36.5 of the archipelago’s population this year.
UPDATE 1/16/15: This article has been updated to reflect that Bareksa’s marketplace deals exclusively in mutual funds, and does not offer trading in stocks or bonds at this time.
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