JIMFE (Jurnal Ilmiah Manajemen Fakultas Ekonomi) Vol. 6 No. 1, Juni 2020, Hal. 43-58 https://journal.unpak.ac.id/index.php/jimfe P-ISSN: 2502-1400, E-ISSN: 2502-5678 43 GUARANTEE PRODUCT PORTFOLIO: PERFORMANCE AND OPTIMAL PORTFOLIO ANALYSIS Santosa 1 , Noer Azam Achsani 2 , Hendro Sasongko 3 1, 2 School of Business, IPB University, Bogor, Indonesia 3 Faculty of Economics, Pakuan University, Bogor, Indonesia Email: santosa_88@yahoo.com ABSTRACT This study aims to analyze the performance of guarantee products and optimize guarantee portfolio at PT Penjaminan ABC. The method used in forming the optimal guarantee portfolio is the Markowitz method and the single index model. The results of the formation of optimal portfolios based on the Markowitz method show that there are five eligible guarantee products included in the optimal guarantee portfolio, namely construction financing, counter bank, general financing, micro financing, and multi-use financing. While custom bond, surety bonds, and other guarantees are not included in the optimal portfolio. In contrast to the Markowitz method, based on the single index model, all guarantee products are not eligible to be included in the optimal guarantee portfolio. Managerial implications of the optimal guarantee product portfolio is an increase in guarantee returns which will further increase company profits and increase company equity. An increase in company equity will reduce the gearing ratio in order to comply with regulations, because the gearing ratio is calculated by dividing the outstanding guarantee volume by the total equity. Keywords: risk, return, optimal guarantee portfolio ARTICLE INFORMATIONS Article history: submitted: April 12, 2020; revised: June, 1 2020; accepted: June 11, 2020 JEL Classifiction: G11 How to cited: Santosa, et al. (2020). Guarantee Product Portfolio: Performance and Optimal Portfolio Analysis. JIMFE (Jurnal Ilmiah Manajemen Fakultas Ekonomi), 6(1), 43-58. https://doi.org/10.34203/jimfe.v6i1.1928 Copyright©2020. JIMFE (Jurnal Ilmiah Manajemen Fakultas Ekonomi) Universitas Pakuan INTRODUCTION Businessmen that classified as Micro, Small, and Medium Enterprises (MSME) have a huge role in sustaining the national economy. However, the empowerment of MSMEs faces many obstacles, including accessing credit from banks, especially because MSMEs are unable to meet collateral requirements. The Guarantee Company assists MSMEs by acting as guarantors for debtors to banks. Guarantee is the activity of providing guarantees by the Guarantor for the fulfillment of Guaranteed financial obligations to the Recipient of the Guarantee. In running its business, the guarantee capacity of a guarantee company is limited by the gearing ratio, which is the ratio between the guaranteed volume of the guarantee and its amount equity. In accordance with Financial Service Authority (OJK) regulations, the maximum gearing ratio is 40 times. Based on the results of management studies in 2017, the gearing ratio at the end of 2018 is projected at 38,07 times and at the end of 2019 at 42,85 times. This means that the gearing ratio in 2019 will violate applicable regulations. Based on this study, management submitted a request to shareholders to increase the paid-in capital of Rp50 billion. With this additional paid-in capital, the gearing ratio in 2018 will be 32,48 times and in 2019 it will be 36,95 times. The increase in paid-up capital in 2018 is not in accordance with the plans set out in the company’s Long-Term Plan 2015-2019. In the