Jakarta, CNBC Indonesia – The Indonesian Pension Fund Association (ADPI) plans to increase its investment portion in stock instruments this year, taking advantage of the cheap stock market conditions. However, the selection of shares to invest is also done carefully so that it can provide returns that are in line with the target.
ADPI chairman Suheri said the selection of shares to be invested was adjusted to the characteristics of pension fund investments that were more long-term, but still had to be liquid.
“What is certain is that the character is big cap, the LQ45 is the least, the liquid one, which also has prospects. For fear that small, speculative stocks are very dangerous for pension funds,” Suheri told CNBC Indonesia, Monday (5/4) / 2021).
He explained that the stocks chosen are stocks that provide good yields and dividends to investors. With such characteristics, cyclical stocks are considered less suitable for pension fund investments.
Meanwhile, the selection of shares itself becomes a technical matter which is determined by each pension fund according to its respective strategies.
As for debt securities, he said, pension funds have an investment allocation that is determined by regulations from the Financial Services Authority (OJK).
In POJK number 1 /POJK.05/2016 concerning Investment in Government Securities for Non-Bank Financial Services Institutions, pension funds are required to invest 30% of their managed funds (asset under management / AUM) in Government Securities (SBN).
Others are investing in corporate bonds. According to him, to invest in this instrument requires caution because the higher the interest rate offered, the higher the risk that must be borne.
For this reason, the selected corporate bonds must have at least the most investment grade rating.
“The rating is a minimum stipulation from the OJK, if I’m not mistaken it is BBB. For us, at least A,” said the man who is also the President Director of Astra One Pension Fund.
Previously, he said that the current stock market condition was experiencing an improvement in performance, so that it became an attraction for pension funds to increase their investment portion in stocks. However, it is estimated that this addition will not be too large.
Currently, the average asset under management (AUM) placement of pension funds placed in stocks is 10.06% and 5.41% in mutual funds.
This amount is indeed smaller than the portion of BP Jamsostek’s placement of funds in stocks and mutual funds, which are 12% and 8%, respectively.
Jamsostek has been determined to reduce its investment portion in stocks and mutual funds. This policy was taken in the context of Asset Matching Liabilities (ALMA) Old Age Security (JHT).
President Director of BPJS Ketenagakerjaan Anggoro Eko Cahyo said that later the portion of the investment will be diverted to investment in bonds or direct investment. This is done to minimize market risk as has happened recently.
“We see that the strategy is to make changes from stocks and mutual funds to bonds or direct investment. So that we will slowly recompose existing assets to minimize market risks that occur today,” said Anggoro in a hearing with Commission IX of the House of Representatives, Tuesday (30/3/2021).
(hps / hps)
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