Ciptadana Asset Management on the Sharia investment opportunity in the country with the largest Muslim population in the world
February 24, 2015
Indonesia has the largest Muslim population in the world. How is the Sharia Fund doing in the country?
The first Sharia Mutual Fund in Indonesia was launched in 1997 and the Jakarta Islamic Index, the first Islamic Index in Indonesia, was launched in 2000. Growth of the Sharia Fund growth is not as fast as that of non-sharia funds. The total Asset Under Management for the Sharia mutual fund industry at the end of December 2014 is only around 5 percent ($950 million) of the total ($18.6 billion).
What are the opportunities and challenges for Sharia investment in Indonesia?
Sharia based investment has very good prospects in Indonesia. Indonesia’s economic growth is above the average of the world economy. At present, Indonesia is headed by an elected president Joko Widodo. It makes Indonesia very attractive for investment in the capital markets. We believe that the growth of Islamic stock market will be more than 15% in 2015 and growth will continue for the next few years.
The challenge for Sharia investment in Indonesia is lack of understanding. Some of Indonesia’s investors consider the stock market as ‘gambling’. Hence, they are reluctant to invest in the capital markets. Investors need education.
What should you do to grab the opportunity?
The role of an investment manager is to educate the community about Sharia investment. We will also try to create more Sharia investment alternatives as the number of instruments in the market is limited.
Meanwhile, we will continue to manage our Sharia Fund, perform consistently and deliver good performance.
How you see the investment opportunity in 2015?
There are two major investment themes in 2015: falling oil prices and possibility of the Fed hiking interest rate. A fall in oil prices should be positive to Indonesia’s effort in lifting unproductive subsidies. It also increases consumer purchasing power through lower energy prices and benefits companies’ profit margin, especially sectors that have significant energy cost. Therefore, consumer, automotive, telecommunication, infrastructure, construction and basic industries sectors, which represent more than 75% of the Jakarta Islamic Index, will benefit. On the other hand, the possibility of interest rate hike by the Fed this year will hurt financial and property sectors, which have very low weightage in the Jakarta Islamic Index. We believe Islamic funds will deliver a good performance in 2015.
You have won the IFM award for Best Islamic Equity Fund in Indonesia. What does this recognition mean to you?
We had never thought that our Cipta Syariah Equity (CSE) fund would get recognition at the international level. CSE Mutual Fund has got several domestic and international awards. However, this is the first time we received recognition from a major institution like International Finance Magazine. We are confident of supporting the Islamic mutual fund industry, especially in Indonesia and have a great chance to grow rapidly in the future.
|About Ciptadana Asset Management
PT Ciptadana Asset Management (CAM) is one of first investment companies licenced by Bapepam (Indonesian Capital Market Regulatory). It was established in 1991 and received its investment management licence from Bapepam in April 14, 1992.
It manages various mutual funds that invest in Indonesian equities, fixed income instruments, as well as providing structured funds management services, tailor-made for each client, whether high net-worth individuals or institutions. Investment strategies are designed to reflect each client’s financial assets, obligations and risk appetite, and to achieve their investment goals.
In 1992, CAM launched Indonesian Growth Fund, which is a pioneer in the Indonesian mutual fund industry. In 2012, it launched DIRE Ciptadana Properti Ritel Indonesia, which was a pioneering real estate investment opportunity in Indonesia.