Effect of Consumer Confidence Index, Interest Rate, Stock Market Composite Index, and Inflation on the Net Asset Value of Indonesian Mutual Funds

doi:10.7176/ejbm/13-21-01

Abstract

The growth of the mutual fund industry will continue to grow positively in line with the condition of the national economy, which is starting to recover from the crisis caused by the pandemic. It is essential to study the factors that influence this phenomenal growth to carry out risk mitigation. This research focuses on the factors that affect the NAV fluctuation by considering macroeconomic dimensions such as the consumer confidence index, interest rates, the stock market composite indexes, and inflation as independent variables. The study uses monthly time series data with the period from January 2013 to December 2020. The VAR model performed in the study proved that only the Composite Stock Price Index variable in the previous month significantly affects the Net Asset Value prices in the short- term. The impulse response function also confirms a strong relationship. The Composite Stock Price Index can influence the fluctuations to the Net Asset Value of Indonesia mutual funds. The composite stock price index can be used as a particular consideration when assessing the Indonesian mutual funds. Keywords: Mutual Funds; Consumer Confidence Index; Interest rate; stock market composite indexes, mutual funds DOI: 10.7176/EJBM/13-21-01 Publication date: November 30 th 2021

Highlights

Increasing investment is crucial in accelerating economic development (Susic et al, 2017)
This study aims to confirm the effect of interest rates and stock market composite indexes on the mutual fund industry in the short and long term
The objective pursued in this work consists in studying the empirical influence that exists from the Consumer Confidence Index, Interest Rates, Composite Stock Price Index, and Inflation to the Net Asset Value of the Indonesian Mutual Fund Industry

Summary

Introduction

Increasing investment is crucial in accelerating economic development (Susic et al, 2017). Mutual funds are one of the investment instruments in the Indonesian capital market that are in great demand by the public with high growth in the last eight years(Robiyanto et al, 2019; Gusni et al, 2018). In 2013-2020, the growth of the Indonesian mutual fund industry consistently reached a high record, which was reflected in the aggregated Net Asset Value (NAV)(Indrakusuma, 2018). In 2020, the NAV of the Indonesian mutual fund industry reached IDR 573.54 trillion; this value is the highest record in history(Table 1). This fact is not in line with national economic conditions because it coincides with Indonesia's economic recession due to the Covid-19 pandemic.

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Methods

Conclusion