Indonesian retail investors prefer plain vanilla, capital-protected funds that invest largely in government bonds as underlying assets, according to Abiprayadi Riyanto, president and director of Mandiri Investasi (Mandiri), the asset management unit of Bank Mandiri.
The protected products have no guarantor, unlike a guaranteed fund. Maturities are typically two to three years, since longer than that is a hard sell, Riyanto told the Asset in an interview this month.
Mandiri is seeking to expand its non-Indonesian assets to 20% of its total assets under management from its current level of 1.5%. The firm's AUM amounted to IDR19.4tr ($2.2 billion) at the end of December 2010.
The second most favoured asset class is equity funds attributed to their attractive performance, while the third favourite is money market funds because of their yield and liquidity.
About 30% of the industry's total assets are in equities, 30% in capital protected funds, and the rest are in money market funds and other instruments, including 2% in Shariah funds, according to local association APRDI.