Fixed income and equity-based mutual funds are expected to perform well in the second quarter of 2023. It could turn positive on a quarterly basis if The Fed’s policy conditions matched market projections.
This is according to Nicodemus Anggi, Research and Consulting Infovesta Utama. Anggi stated that fixed income mutual funds had recorded positive returns in Q2 of 2023. As for equity-based mutual funds, he believed they could turn positive on a quarterly basis if The Fed’s policy conditions matched market projections and there were no unexpected disruptions.
He noted that in Q2 of 2023, the market’s focus would be on the implementation of the May FOMC Meeting, and how The Fed would proceed. “Whether it is indeed only a further increase as per the FOMC Officials’ Dot Plot or rather more dovish with no further increases,” he said on Monday (3/4/2023).
Anggi mentioned other catalysts that market participants should be aware of, including monthly inflation releases and Indonesia’s quarterly economic growth and monthly inflation releases. In Q1 of 2023, only Infovesta’s equity-based mutual funds experienced a decline in returns, according to Nicodemus. This was due to the fact that the underlying equity, namely IHSG, tended to be under pressure in Q1 of 2023 as a result of global sentiments, such as hawkish signals from The Fed in the first two months of 2023, global economic slowdown risks, and the European banking crisis.
“Foreign fund inflows into SBN, along with declining inflation and a solid economic fundamentals, and at the end of Q1, signals of monetary policy easing from The Fed, become positive factors supporting the market’s strengthening,” Nicodemus added. Rudiyanto, Director of Panin Asset Management, agreed that fixed income mutual funds are still attractive, and equity-based mutual funds are also attractive due to Indonesia’s very strong economic stability.
“In addition, Indonesia’s inflation rate is very well under control, and BI indicates that the peak of interest rate increases has already been reached,” he said on Monday (3/4/2023). Panin AM has devised several strategies for Q2 of 2023 by taking advantage of the momentum to invest in mid to long-term government bonds for fixed income mutual funds. As for equity-based mutual funds, Panin AM has chosen investment instruments that are in line with economic growth.
“On the other hand, portfolio diversification is basically tailored to the risk profile, investment objectives, and investment horizon of each investor,” he explained. However, Rudiyanto believed that bonds would be an asset to watch in the coming year. Therefore, he suggested that fixed income mutual funds should account for 50% to 70% of the investment portfolio for conservative investors.
