Indonesia’s Aberdeen and Phillips in e-trading pact

By Masyitha Baziad July 20, 2016

Aberdeen mutual funds to be offered on Phillips’ online trading platform
Digital strategy expected to push its customer base and hit Top 5 ranking

Indonesia’s Aberdeen and Phillips in e-trading pact

INDONESIAN investment management firm PT Aberdeen Asset Management is going the electronic trading (e-trading) path with support from PT Phillips Securities Indonesia, a member of the Hong Kong-based PhillipsGroup.

Phillips Securities will help Aberdeen market its mutual fund products via its mobile-friendly online trading platform Poems (Phillip’s online electronic mart system).

Traditionally, customers needed to go through sales agents at banks for their mutual fund needs.

Currently there are only two products available on the Poems platform: The Aberdeen Indonesia Money Market Fund, and the Aberdeen Indonesia Balanced Growth Fund. However, the company will add three more products in August.

For Aberdeen, entering the e-trading arena is a strategic step as it needs to push its products to more customers.

“We are definitely trying to reach new markets by offering our products through the digital platform,” Aberdeen Asset Management president director Sigit Wiryadi told the media in Jakarta on July 19.

“We are positive that this is the only way for us, especially knowing that Phillips’ platform Poems is very strong on mobile,” he added.

In a previous statement, the company said it is targeting to be in the top five of the largest investment management firms in Indonesia by 2020. There are 84 such firms listed by the Financial Services Authority.

According to the Indonesian Capital Market and Financial Institutions Supervisory Agency, Aberdeen had a funds value or net asset value (NAV) of Rp894.9 billion (US$68.4 million) in 2015.

Currently, the top two investment management firms in the country are Schroder Investment Management Indonesia with an NAV of Rp48.2 trillion (US$3.7 billion), and BNP Paribas Investment Partners with an NAV of Rp21.7 trillion (US$1.7 billion).

With its rather ambitious five-year target, Aberdeen is looking at more channels to distribute its products, and an online platform seems to be one promising avenue.

Sigit declined to disclose any numbers in terms of how many new customers the company wants to acquire by going online.

However, he said that he expected the platform would help Aberdeen capture more customers than its current channels.

As part of Scotland-based Aberdeen Asset Management Plc, selling Aberdeen’s mutual fund products online would support its long-term investment focus, he argued.

“We are focusing on long-term investments, and by doing so, we definitely need more customers who also want stability in their investments,” he said.

“Having our products traded online means customers can check on their investment performance all the time – it helps them feel more secure,” he added.

Sigit said that the online purchasing of mutual funds was a challenge earlier, as customers felt safer communicating and meeting with sales agents.

However, consumer behaviour is now changing and moving increasingly to mobile channels, a gap that needs to be filled, he said.

“Educating customers is still our No 1 priority, and that is also why we choose to partner with Phillips Securities, as its Poems platform is also very active in holding seminars and distributing online materials on e-trading,” he added.

Phillips Securities Indonesia launched Poems in 2003, and the platform currently has 21 investment management firms on board, offering more than 100 products.

“Why investment managers need to go online is simply because there is no other distribution channel that has this much spread and impact in the digital era,” said Phillip Securities managing director Daniel Tedja.

Push for e-trading

Earlier this month, Indonesia’s Financial Service Authority (OJK) issued an additional regulation on mutual funds, saying that investment managers are allowed to partner with other parties to sell their funds via electronic channels.

According to OJK, as of June last year, Indonesia had 1,228 mutual fund products, with an NAV of Rp309.44 trillion (US$23.68 billion).

“Ideally the proportions of funds in banks, capital market, and microfinance institutions should be in the same ratio – even if there is a gap, it should not be so high,” said Hendrikus Passagi, senior research executive at OJK’s strategic policy development department.

“However in Indonesia, all the funds are still managed by banks,” he told Digital News Asia in Jakarta.

“As regulator, OJK wants to push our other financial instruments to rise, therefore we are pushing for the capital market to also go digital, reach more people, and gather more money – it would be very beneficial to the country,” he added.

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