Indonesian Islamic Mutual Funds Surge 61% in 2025

Strong Growth Across Fund Categories

Indonesian Islamic mutual funds have demonstrated robust growth in 2025, with Assets Under Management (AUM) rising by 61.30% year-to-date to reach Rp 81.54 trillion by November 2025. This significant increase was driven by favorable market conditions across various asset classes.

Market Drivers of Growth

The performance of Islamic mutual funds was primarily influenced by two key factors:

1. Stock Market Recovery: The strengthening of both the Indonesian Composite Index (IHSG) and Islamic stock indices like ISSI provided a boost to equity-based Islamic funds. While blue-chip stocks remained under pressure due to foreign investor sentiment, commodity and second-tier stocks performed relatively better, contributing to the overall growth.
2. Declining Bond Yields: The decrease in bond yields positively impacted fixed income Islamic funds, similar to their conventional counterparts. This trend made existing higher-yield bonds more attractive, supporting the growth in AUM for these funds.

Expert Insights

Financial experts attribute the growth to the performance of underlying market instruments. Arjun Ajwani, Research Analyst at Infovesta Kapital Advisori, noted that the fundamental drivers for Islamic mutual funds are similar to conventional funds, with their performance closely tied to market movements. Reza Fahmi from Henan Putihrai Asset Management (HPAM) added that the stability in Islamic stock indices, despite high market volatility, was a key factor in the positive performance.

Outlook for 2026

The positive momentum in Islamic mutual funds is expected to continue into 2026, supported by ongoing market recovery and potential further decline in bond yields. However, market participants remain cautious about global economic uncertainties and their potential impact on domestic financial markets.