One of the mutual fund's features is the possibility for an investor to start the investment with a small amount of fund. This characteristic is suitable for individual investors in retail market. The company believes in the potential of this market, however in the meantime these products are still targeted to small institutional as a bridge to retail market.

Working together with the GFP group, MeesPierson is aiming to recognise the market behaviour of retail market relating the performances of mutual funds. The project has goals to identify the prospective target market to start in the retail market, to plan a marketing strategy to position PESONA and LESTARI, and this GFP serves as a purpose for future study for launching other mutual funds.

The team did a survey by conducting two focus group discussions. The first group represent those who have knowledge about mutual fund, but did not invest their money. The second group represent those who have invested their money, but later redeemed the investment.

Most participants of the first focus group discussion stated the reasons for not investing in mutual fund are because of no guaranteed income, complicated procedures, low' credibility of fund managers, transparency, and lack of advertising of mutual fund products. Moreover, most potential customers feel uncomfortable/unsecured to let other people manage the investment, they feel there are too many transaction cost/management fees, and they feel no excitement in investing in mutual fund. They also think that given the same risks, they better do it by themselves.

From the second focus group discussion emerged several explanations for redeeming the investment. There are two main reasons; the first was no guarantee/hope to rebound, so it is better to quit now before further loss. Time deposit offered better return was the second reason for redeeming mutual fund.



Parallel to the primary data research, the team also conducted secondary data research based on the government agency, publications, regulations, competitors, and prospectuses in order to identify strong indicating issues that could lead to the success in this industry.

Six alternative solutions were generated from the above research. The team recommends that the Company should enter retail market and launch both Big Cap Index Fund (equity fund) and money market fund. Big Capitalization stocks are stocks that significantly influences the market index. By forming a Big Cap stocks portfolio with composition that similar to the market, the Index Fund will fluctuate in line with the market fluctuation.

A number of contra issues follow the recommendation. Encountering such cons, the Company should

-.start to educate the retail markets/ individual investors,

-communicate the advantage of being foreign and independent firm,

-develop the marketing organization to include the consumer product

expertlse,

-and later open more distribution channels / outlets in other big cities to reach or get closer to the market.



Research Location: PT. Meespierson Investman Management

Supervisor: Roy H. Sembel, MBA, Ph.D. and Amalia E. Maulana, MM, MBA

Accepted on 27 September 1999



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