06 April 2011

New Fund: OSK Indonesia Equity Growth Fund

To join in the Indonesia Theme bandwagon, OSK launched its own version of Indonesian Equity Growth Fund, which aims to achieve medium to long term capital appreciation through investments in securities of companies with high growth potential that are listed on the Indonesian Stock Exchange and/or companies listed on other exchanges whose business are substantially in Indonesia.

This fund is suitable for investors who:
  • wish to participate in the potential and investment opportunities of the Indonesian economy
  • are willing to accept higher risk in their investments in order to achieve potentially higher returns in the medium to long term
  • seek capital appreciation rather than income
8 Answers to "WHY invest in Indonesia?"
  1. Impressive equity market performance
    • Jakarta Composite Index gained 46% in 2010
    • The 7th year in which Indonesia has outperformed Asia ex-Japan over the past 9 years (Source: CLSA Research January 2011)
  2. Strong economic growth
    • Expected growth of 5.7% to 6% in year 2011
    • Growth is driven by domestic consumption, currently stands at about 65% of Indonesia GDP
  3. Favorable demographics
    • 4th largest population in the world
    • Middle and upper-middle class households is expected to increase from 29% currently to 41% by 2012
  4. Resources rich
    • World's biggest CPO producer
    • World's biggest Thermal Coal exporter
    • World's biggest Tin exporter
  5. Government projects and infrastructure development
    • 2011 budget is pro spending, especially in infrastructure development
    • Development expenditure expected to increase 29% in 2011
  6. Equity market remains attractive
    • Currently trading on 13x PE with 22% earnings growth and 25% ROE
    • Indonesia has the 2nd lowest Equity Market Cap / Nominal GDP ratio in the region
  7. Outlook on Rupiah to strengthen
    • Lagged regional currencies in the past 10 years
    • Improving outlook for Rupiah makes Indonesia attractive to foreign investors
Investment Approach
  1. Combination of "top-down" and "bottom-up" approach
    • An investment strategy that is not mutually exclusive but closely inter-twined between asset allocation and stock specific selection
  2. Value driven approach
    • Stocks are then selected for their value
  3. Emphasis on growth
    • Stocks are further selected for their growth potential
Investment Approach
Portfolio Strategy
OSK sees several investment opportunities including
  1. Banks
    • Strong loan growth (+25%) driving revenues
    • Low penetration of key financial services and credit
  2. Infrastructure
    • Total investment needed for infrastructure projects 2010 - 2014 will reach USD34.14 billion
  3. Commodities
    • Medium term outlook for thermal coal positive due to increasing demand from China, India and Indonesia
  4. Consumption
    • Low consumption in categories such as cars, motorcycles, cellular phones and cement

Source: OSK-UOB unit trust management berhad

Click here to read the prospectus

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