The mass redemption in the mutual fund industry in Indonesia had emerged a lot of theories that made many investors transfer out their fund from mutual fund.

Many parties said that miss selling issue played biggest contribution on the mass mutual fund redemption. The flow of redemption in 2005 was initiated by investors' lack of knowledge on mutual fund product.

Sales agent, dominated by banks, was said to be incompetent in delivering the right explanation on the product to the investors. Even though sales agent did not violate mutual fund sales mechanism, there were actions of changing people perception on mutual fund products. Both sales agents and investment managers should seek the right solution to improve the quality of sales people through education. With a good product knowledge, it is expected that sales people have the capabilities to explain about the risk of the product and capable to identify risk profile of target investor properly. Finally, the product goes to the right investor in order to prevent the massive redemption in the future.

Protected fund is one of the best alternatives~for investors who are not comfortable with volatile instrument. Investor can transfer the fund to protected fund to protect their investment value.



Research Location : PT Bahana TCW Investment Management