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    Monday, October 15, 2007

    Kehati Lestari Mutual Fund

    In support to the Blog Action Day 2007, I'm writing about a new mutual fund which was just launched last July. That mutual fund is Reksa Dana Kehati Lestari. So, what is so special with this mutual fund? Well, the issue of this year's Blog Action Day is about the environment. Reksa Dana Kehati Lestari is the first socially responsible mutual fund in Indonesia focusing on the issue of environment sustainability. It is co-managed by a local investment company, Bahana TCW Investment Management, and an environmental foundation, Yayasan Keanekaragaman Hayati (Kehati Foundation).

    The Kehati Foundation is a fund raising non-profit entity and its main mission is to facilitate local organizations and build their capacity to benefit from the natural resources and at the same time conserve the natural biodiversities. The Kehati Lestari mutual fund enables individual and institutional investors to participate in the philanthropic activities to benefit the foundation. Investors would be able to invest and donate at the same time, by allocating either their full investment, full return only, partial return only, or just the management fee, as streams of donations for the foundation as long as the investment is kept in the fund. This investment structure is called quasi-endowment fund, where investors still hold ownership to the investment principal, though they can also opt to donate the full principal as well in the full endowment scheme.

    While quasi-endowment structure may not be uncommon in the western world, a mutual fund is probably the better vehicle, if not the only vehicle, for large number of Indonesian investors to invest and donate consecutively as the trust (the common vehicle in the west) law is virtually non-existent at the moment. Although one may argue that the law of waqf (religious endowment) may undergoing better progress and can substitute for the trust as the investment vehicle for this type of philanthropic needs.

    I think this innovative product is suitable for a wide range of investors who want to support the environmental cause in a long-term and sustainable way. Investors may increase their participation level and switch their investment allocation to more generous options as their overall net worth grew and their wish to leave a legacy present itself. Moreover, institutional investors may claim their good act of corporate social responsibility (CSR) by investing in this mutual fund.

    1 comment:

    Edward Ott said...

    Interesting blog you have here.