Pension funds set to increase equity stock invesments

JAKARTA: Employers' pension funds may increase their exposure in equity stock investments to help achieve higher returns. These funds are hoping to have 11%-12% yields until the end of this year. Stock investment's improving performance early in the second quarter has attracted investors and pension funds to think about raising their portfolio in stocks, said Djoni Rolindrawan, chairman of Indonesian Pension Funds Association (ADPI).Currently, many of our members have changed their investment policy after they set an investment target at an average of 11%-12%," he told Bisnis.If association members didnt increase their equity stock investment portion in their total portfolio, then their targeted returns are unlikely to be achieved this year.Earlier, Djoni said the investment portion that pension funds have in stocks may be pegged at 20% maximum, if the bearish trend occurs.Pension Funds had planned to increase their investment portion in government bonds up to 55%-60% if the Indonesian stocks' broader measure the Jakarta Composite Index (JCI) continued to decline until the end of the first half, Bisnis reported on March 27.Djoni predicted that pension funds will potentially increase their stock investment portion up to 22% in the second quarter 2011, from previously 20%. JCI has been fluctuative since early this year, surging to 3,699 on December 29, and falling to 3,379 on January 21. The index then turned bullish again, reaching 3,678 at the end of the first quarter.Djoni said that bank deposits have become one of the favorite investment options for pension funds since they give lower risks. Nevertheless, the yields are only around 7%-9%.Despite positive stock trend, Djoni assessed the limit portion of pension fund investment is still quite flexible and have interesting investment yield. The investment limit in equity securities is at 20% per stock portion.He admitted that if the investment in one stock portion is increased from the current limit at 20%, then pension funds will bear large risks.This is regulated in the Finance Ministry Decree No. 199/PMK.010/2008 on Pension Fund Investment.Investment portionThe association assessed that pension funds will increase their investment portion this year although the limit of stock investment portion is quite good.He presumes the condition is supported by the stock market condition that is still bullish and may grow until the end of this year.The regulator is reluctant to increase the portion permitted for pension funds to invest in each stock portion, Mulabasa Hutabarat, head of the pension fund department at the capital market and financial institution watchdog (Bapepam-LK). (T06/NOM)

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