Economic conditions are still uncertain, should you choose stock or fixed income mutual funds?

Reporter: Danielisa Putriadita | Editor: Tendi Mahadi

KONTAN.CO.ID – JAKARTA. The performance of fixed income mutual funds is superior to the performance of stock mutual funds. Infovesta Utama assesses that fixed income mutual funds with corporate bonds and non-index stock mutual funds are more attractive to be chosen as investment instruments when the economy has not recovered and is uncertain.

Fixed income mutual fund yields as reflected in the Infovesta Fixed Income Fund Index grew by 0.53% on a basis year to date until Friday (16/7).

This high performance was supported by the growth of the corporate bond index (Infovesta Corporate Bond Index) and government bonds (Infovesta Government Bond Index), which grew 2.91% and 1.83%, respectively.

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The strengthening of the performance of fixed income mutual funds was also supported by the growth in participation units of Rp 4.19 billion, an increase of 4.98%. It is not surprising that the managed funds of fixed income mutual funds increased by 4.37% this year.

On the other hand, the return on equity mutual funds was depressed by 5.38%, accompanied by a decrease in participation units of Rp. 1.47 billion, or a decrease of 1.55%. However, this condition is still better than index mutual funds, which experienced the deepest decline in managed funds by 22.81%, as well as participation units which also fell by 17.37%.

Infovesta Utama in its research, Monday (19/7), said the decline in performance of equity mutual funds was caused by the weakening of most of the Indonesian indices in the midst of the Covid-19 pandemic which was increasing for the number of daily cases.

Meanwhile, the Indonesian economy is still under pressure as seen from the annual inflation as of June 2021, which fell to the level of 1.33% from 1.68% in May. Indonesia’s economic growth as reflected in the growth of gross domestic product also recorded a negative number for four consecutive quarters.

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In addition, Indonesia’s trade balance also fell in June to US$ 1.32 million from US$ 1.4 million in May.

Thus, Infovesta sees that the current economic condition is still a yellow light for investors to be careful because there is still no certainty about the economic recovery in the near future.