Nikereact.org – Mutual funds are one of the most widely used economic activities in Indonesia. Basically, this mutual fund is an investment activity.
Then, what is the difference between mutual fund investments and other investments? This article will discuss the meaning of mutual funds, their types, benefits, and how to do it.
Understanding Mutual Funds
Understanding mutual funds is one thing that can be used as an investment. Mutual funds are an alternative investment for the investor community. Especially for small investors.
Investors who invest their funds through mutual funds generally do not have much time and expertise. They do not have the expertise to calculate the risk of the investments they make.
Mutual funds are designed as a means to raise funds from the public. This applies to people who have capital. However, only have limited knowledge and time.
In addition, mutual funds are also expected to increase the role of local investors. So that they can invest in the Indonesian capital market.
Generally, mutual funds can be interpreted as a forum used to raise funds from the investor community. To further invest in the securities portfolio by the investment manager.
There are three things related to the definition of mutual funds above. First, there is a fund from the investor community. Second, these funds can be invested in a portfolio of securities and third, these funds can be managed by an investment manager.
Therefore, the funds in mutual funds are mutual funds from investors. While an investment manager is a party who can be trusted in managing these funds.
The definition of mutual funds is also stated in the Capital Market Law, No. 8 of 1995 Article 1 paragraph 27. According to the article, the definition of a mutual fund is a place that is used to collect a certain amount of money. The source of money is the community of investors.
The money can be invested in a portfolio of securities. The person who invests is known as the investment manager. Therefore, the notion of a mutual fund is like a basket.
The basket is owned by the investment manager. The basket will be filled with various types of shares. The basket in which the stock is clean depends on the concoction, prescription or processing of the investment manager.
Mutual funds are generally divided into two types. First, open mutual funds. Second, closed mutual funds. Here is an explanation:
1. Open mutual funds
The definition of open mutual funds is a type of investment in mutual funds that can be resold. The sale occurred without a method of selling on the stock exchange at the investment manager’s company.
Generally, most of the mutual funds at this time are open types of mutual funds. The selling price is generally known to be equal to a net asset value.
2. Closed mutual funds
The definition of a closed mutual fund is a type of mutual fund that cannot be resold to an investment manager company. Generally, participation units can only be traded on the stock exchange. The selling price will also differ from the asset value.
The limitations of investors to invest for a long period of time make assets or in mutual funds cannot be large. However, there are four important elements that must be understood by potential investors.
First, mutual funds are a collection of funds from a number or several investors. Second, the funds will be invested through an investment instrument. Third, mutual funds will be run and regulated by a professional and credible investment manager. Fourth, mutual funds are investment instruments for funds from the medium to long term.
This book offers everything you need to know about mutual funds, from definitions, regulations, investment procedures, mutual fund practices, and related research on mutual funds and capital market investment in Indonesia. Discussed, among others: 1. Basic understanding of mutual funds, how they work, preparation before investing in mutual funds, to how to check the legality of an investment product. 2. Types of mutual funds in Indonesia along with a comprehensive risk and return study. 3. How to retrieve and process investment data, such as stock price data, mutual fund prices, and calculate risk and return which is the topic of investment research. 4. A collection of research and investment strategies that are often asked by investors, such as Window Dressing, Sell in May and Go Away, Good Dates to make periodic investments, and how to predict JCI and Bond returns. 5. A step-by-step guide for electronically reporting mutual funds in the SPT.
Types of Mutual Funds
After knowing the meaning of mutual funds, the next discussion is the types of mutual funds. These types of mutual funds are just as important to know as mutual funds.
To start investing in mutual funds, one must first know what types of mutual funds there are. The following are the types of mutual funds:
1. Stock Mutual Funds
The definition of a stock mutual fund is a type of mutual fund that will make at least 80% of the funds collected will be managed in the form of shares. Profits that will be obtained from stock securities.
This will also provide greater results in the form of capital gains. Because, there is a growth in dividends and stock prices in it. This type of mutual fund seems to be able to bring very high profits. However, it must still be accompanied by a high risk.
2. Mixed Mutual Funds
The definition of a mixed mutual fund is a type of mutual fund whose potential loss is below that of a stock mutual fund. In this type of mutual fund, investments will be made in two stock exchanges at the same time. Both are debt securities and equity securities. The comparison in the two securities does not include equity mutual funds and fixed income funds.
3. Fixed Income Mutual Funds
The definition of fixed income mutual funds is a type of mutual fund that has a minimum of 80% of the funds collected. Then the funds will be managed into a debt stock exchange.
The potential profit from this type of mutual fund is quite high. Of course, this is accompanied by a high potential for losses. However, the profit potential for mixed and equity mutual funds is still higher.
4. Money Market Mutual Funds
Understanding money market mutual funds is a type of mutual fund that will provide a much lower risk of profit. However, the potential return value is limited. At least about 80% of money market mutual funds.
The funds will be managed in the money securities market. The form is debt securities with maturities of less than one year, such as SBIs or time deposits.
5. Index Mutual Funds
The definition of an index mutual fund is a type of mutual fund whose potential losses and profits will be the same as the index. Most of the funds in JNU type mutual funds will be managed passively.
This means that buying and selling on the stock exchange will not be carried out. Unless there is a new redemption or subscription.
Mutual Fund Characteristics
After knowing the meaning of mutual funds and their types, the next thing to know is the characteristics of mutual funds. There are 10 characteristics of mutual funds. These things can distinguish mutual funds from other types of investment instruments.
- A mutual fund is an asset management company, which is traded by a mutual fund selling agent. Either at a bank or other securities company.
- There is no insurance fee, or sum assured in a mutual fund.
- Mutual fund purchase fees range from 0% to 2%. This figure is obtained from the value of the mutual fund.
Mutual funds do not incur administrative costs.
- The amount of selling fees from mutual funds starts from 0% to 2%. This figure is obtained from the value of the mutual fund in its first year.
- The amount of funds allocated for deposits in the first year ranges from 98% to 100%.
- Mutual funds only use one price.
- Generally, mutual fund sales will feature filling out a risk profile and prospectus.
- Most of the mutual fund investors come from retail and institutional circles. Lastly, most of the mutual fund investors already understand the mutual fund product they will buy later.
Mutual Fund Benefits
Mutual funds are one of the economic activities that certainly have many benefits. What are the benefits of mutual funds? The following are some of the benefits of mutual funds, including the following:
1. Professional management
As previously explained. Funds collected from investors will be managed by an investment manager. He is a professional and very skilled in managing funds that are limited in time.
The investment manager has a very important role. Especially for managing a portfolio in a mutual fund.
2. Investment diversification
Through the existence of an investment diversification, it can help minimize the risk in the portfolio. Even so, there is still nothing that can avoid the investment risks that exist in these mutual funds.
3. Transparent fund management
The third benefit of mutual funds is transparent fund management. Transparent fund information originating from mutual funds can be used to control finances.
Through continuous portfolio development and cost development. Generally, the management of these funds will be issued at a net asset value.
This is done in the middle of every year. Also an annual event that is held regularly. Therefore, these investors can control the growth of the funds invested.
4. High liquidity
A high liquidity, will be able to increase the potential for success in investment. The investors will disburse their participation units, in accordance with the provisions that have been drawn up. The goal is to make it easier for investors to manage their finances.
5. Low cost
As is known, the funds in mutual funds are obtained from a group of investors. This is done professionally. The person who does it is an investment manager.
It will go hand in hand with the ability to invest. Therefore, the transaction fees incurred by each investor will be fairly low.
6. Minimal risk
Each investment instrument will of course have risks associated with their respective losses. Included in this mutual fund. However, the high interest of middle and upper class investors to invest in mutual funds will show something. That the risk of loss in it can be categorized as minimal.
This book not only contains knowledge about financial planning and mutual fund investment in simple language, the addition of caricatures also makes the explanations easier to understand. Apart from helping you become an investor who understands how mutual funds work and transactions, this book will also help you plan SMART for the future through mutual fund investing, manage personal finances better, avoid fraudulent investments, and choose mutual funds and investment managers. the good one.
Steps to Invest in Mutual Funds
Many people may already know about mutual funds. They may also be interested in starting to do so. However, often someone doesn’t do it because they don’t know how to start. So, how do you invest in mutual funds?
Here are 4 ways you can invest in mutual funds. Are as follows:
1. Make transactions on the stock exchange
The first way you can do is register yourself first. In this process, the steps are more or less like opening an account at a bank. Later you will be asked to fill out a form and sign it.
You must prepare the requirements of the documents that have been set. In addition, you also of course have to prepare funds for these investment needs. Make sure to do this on a trading day or weekday.
2. NAV or net asset value as the basis of the transaction
Net asset value or NAV is a value that can represent the total wealth of mutual funds that you own every day. The net asset value will be influenced by the market price of the mutual fund assets. As well as the supply and demand forces of investors.
Then later, the price of the mutual fund will be published in the media. Generally will be published in newspapers. Whether online or not, it is done once a day.
3. Pay attention to the time limit or cut off time
The next thing you should pay attention to is paying attention to the time limit. The time limit for this activity will be around 12.00 to 13.00 noon. If you buy a mutual fund before the deadline, you will get the NAV or net asset value on the date of the transaction.
Meanwhile, if you make a purchase after that time limit, then you will follow the net asset value price on the next day from the date of your mutual fund purchase.
4. Get a confirmation letter for buying mutual funds
If you have completed the transaction process, later you will receive a purchase confirmation letter from the mutual fund transaction you did. The letter has been issued by the local custodian bank. Later you will also get a report on the progress of the funds you invested.
Reports on the progress of these funds will generally be provided once a month. Well, you save the report by sharing. The report is a proof of ownership of the mutual fund. if you do not get the report, then you have the right to request it from the selling bank, or to your investment manager.