Pluang Releases Futures Investment Products, Opens Investment Access to US Public Companies

Digital investment startup Pluang launched the Micro E-mini S&P 500 Index Futures futures investment product to expand access for millennials to reach investment products in the United States public company stock index in an affordable, practical, and safe way. This product can be purchased through the Pluang application, for the time being it is only available on the Android version.

breakthrough Pluang This is quite brave and can be said to be the only startup fintech which offers an alternative investment in the sector. Most players in Indonesia are still involved in popularizing the habit of investing in gold or mutual funds.

Pluang's Co-Founder Claudia Colonas explained that the company is looking at this investment instrument because it wants to provide opportunities for Indonesian investors to diversify their investment portfolio, considering that this alternative is still common for most Indonesians.

He even admitted that the company does not yet have an industry picture of how many investors are interested in investing globally offshore (abroad).

“We hope this will be Opportunity unique in introducing new investment products. We are not the first [providing this product] there are two or three brokers providing the S&P 500, but we are a company fintech first. With easier application access, it will be much more interesting," explained Claudia during a virtual press conference, Tuesday (29/9).

Index futures products offered Pluang it is traded on the world's largest derivatives exchange, the Chicago Mercantile Exchange. Companies are interested in choosing the S&P 500 Index because this index has a superior performance with 325,54% growth in the last 10 years as of December 31, 2019.

Meanwhile, in the last five years this index has shown a yield growth of 75,89%. Meanwhile, in the last three years the growth was 48,7%. That way, this index shows a positive movement trend in the long term.

This performance is supported by the issuer's superior constituents. Only issuers that have reported positive earnings over the last four quarters and have a market capitalization of more than $3,7 billion can enter the index.

Meanwhile, the 10 largest constituents in the index as of August 31, 2020, consist of Apple, Microsoft, Amazon, Facebook, Google, Berkshire Hathaway Inc, Johnson & Johnson, Visa, and Procter & Gamble.

Risk and legality

Claudia explained, this Pluang S&P 500 investment is classified as passive investment because investors usually use strategies buy and hold in the long run. Therefore, passive investing reduces the uncertainty that arises from individual stock picking strategies and strategies market timings which are usually used by experienced investors.

"We want toattract millennials to not only invest in gold but can also start entering and learning about investing in the S&P 500 index.”

However, he continued, this investment carries a moderate to high risk because it is triggered by various factors, such as market volatility that may occur ahead of the US election in November 2020. Plus, the movement of the S&P 500 index is often the opposite of gold, so diversification between the two asset classes can be considered.

"Therefore, in addition to having a medium-high risk profile, this product is also recommended for investors who have investment experience."

In this regard, investors who are suitable to jump into this instrument are those who want to be involved in the international economy, do not have time to constantly monitor individual stocks, do not have medium to long term plans, and are challenged to face medium to high risks due to following the risks of the US equity market. .

Regarding regulations, Claudia stated that Pluang by PG Berjangka has obtained a permit for Channeling Customer Mandates to Foreign Exchanges (PALN) by BAPPEBTI. PALN is the activity of offering contracts and channeling customer orders for these contracts using the system provided by the exchange.

The regulation was made to grow the multilateral industry in the world of futures companies in Indonesia.

Explained further, the nominal investment funds here start from $ 35 depending on the exchange at that time. In the process of disbursing from customer funds to the index exchange, after the customer top up balance to the Pluang application, the funds will be directly forwarded to the PG Berjangka segregate account and forwarded to the Indonesian Futures Clearing House (KBI).

The next process is that the transaction is listed on the Jakarta Futures Exchange. Then, the funds were forwarded by KBI to a separate Prime Broker account used by Pluang in the US, namely Straits Financial which is a broker member on the Chicago Mercantile Exchange (CME). In the last stage, it is this broker who will buy the contract on the CME exchange.

It is ensured that sales and withdrawals can be made directly real-time, aka there is no delay in disbursement. This advantage is that futures products are superior to index mutual funds ETFs (Exchange Traded Funds) whose disbursement or purchase schedule must follow the exchange's operating hours and are added with administrative costs.

“The S&P 500 index has much more liquidity than ETF mutual funds and here there is no administration fee so it is more effective for investors to take profits.”

Since this instrument is still new to Indonesians, of course there are educational challenges that Pluang must often disseminate. Claudia said that her party received many questions from customers because they were not familiar with the concept of futures products.

It doesn't stop at futures products, Pluang is currently waiting for permission from OJK and BAPPEBTI to market mutual fund and crypto currency investment products.

“So far, we offer gold investment because we want to offer investment products that are easy to understand. But in the future, we want to add other products, such as mutual funds and cryptocurrencies, but we are still waiting for permission from the relevant regulators," concluded Claudia.