How to cash in on the Indonesia growth story

Baring ASEAN Frontiers and Fidelity Emerging Asia are among the best bets for investors who are keen to cash in on the Indonesia growth story.

Data released today shows that in the last 12 months Indonesia has experienced its highest growth in 15 years, expanding by 6.5 per cent. It has been highlighted by a number of emerging market managers as one of the hottest prospects in developing regions.

In an FE Trustnet interview last year, Roberto Lampl said that rapid population growth and strong demographics make Indonesia look attractively valued.

According to data from FE Analytics, Baring ASEAN Frontiers and Fidelity Emerging Asia are among the funds with the heaviest exposure to the country.

The FE Five Crown-rated Baring fund has the highest weighting of all the funds that invest in Indonesia, at 25.6 per cent. It has $243m AUM, invests predominantly in financials, and has returned 81.96 per cent since August 2008.

Fidelity Emerging Asia has 14.4 per cent of its $567m AUM invested in Indonesia but has returned just 4.8 per cent since its launch 18 months ago. The fund is headed up by Teera Chanpongsang, who was today listed in the list of FE Alpha Managers for 2012.

Adrian Lowcock, senior investment adviser at Bestinvest, says investors are beginning to look to nations such as Indonesia as their promise begins to translate into tangible returns.

"Indonesia is less publicised than countries such as India and China, but it has the ability to gain the reputation of a leading emerging market," he explained, before warning that funds exposed to a single emerging nation generally carry a high level of risk.

"Investors should look for global fund mangers as opposed to sector-specific funds," he said. "Although Baring ASEAN Frontier has performed well, with 130 per cent growth in the last three years, investors should be aware of the chance of high levels of volatility."

Lowcock suggests Franklin Templeton Frontier Markets as an alternative for investors who are interested in high growth regions. The offshore fund has returned 53.18 per cent in the last three years, twice that of the MSCI Frontier Market benchmark.