For some mutual funds, however, this is a new concept. For beginners in investment, it is important to understand what a mutual funds is and how they work from the mutual fund.
Mutual funds provide a way for investors to pool their capital and invest in capital markets instruments by buying mutual fund participation units. The Investment Manager (MI), will manage the funds so that they can be invested in investment portfolios such as stocks, bonds and money markets.
Mutual Funds Facilitate Investment Diversification
For those who wish to diversify their investments, mutual funds offer a way to do so by breaking down the assets into multiple instruments. Stock funds, for example, allow you to purchase shares in multiple companies with the money collected. This is a comparison to the results you get. In the event that shares drop in one company, at least some of your investments won’t lose. Even if the shares are rising in value, it is possible.
How Mutual Fund Investment Works
Mutual funds are easy investments. This investment has a low risk, as we have already discussed. You can also purchase mutual funds at mutual fund management companies and issuers. Alternativly, the bank and the Investment Manager are already in contact with the Investment Manager.
There are currently many banks licensed as fund selling agents. Those who wish to invest can use the bank’s license as fund selling agents to make it simpler and more secure. Those who are interested in investing need to understand the process.
The Investment Manager raises funds for customers
The funds collected will be invested in one of the investment instruments that were agreed to in advance by the customer.
The Investment Manager provides information to the Customer about his investments. Information provided includes information about product performance, asset composition, and portfolio securities.
The Investment Manager reduced operating costs by reducing the expense ratios that are charged to customers
The Net Asset Value (NAV), and Participation Units are important. Because mutual fund transactions are based on the NAV per UP, which is reported through the media, this is important. One thing is wrong with mutual fund transactions is the NAV’s price calculation.
NAV, or net asset value, is the sum of all funds that can be managed. NAV can also be broken down into an investment instrument. Participation Units (UP) are the management of mutual funds.
You need to know how this investment works. Because there are many mutual funds, this is important to understand.
Mutual Fund Characteristics
This is a company that manages assets or security.
Agents sell these investments through either banks or securities companies.
- Investment risk cannot be covered by insurance.
- The purchase fee equals 0% to 2% of the fund’s value
- There is no administration fee
- In its first year, a sales fee of 0% – 2% of the fund’s value
- Deposit allocation for the first year is 98% – 100%
- Only one price
- Sales often include prospectus and risk profile filling.
- Mutual fund investors can be both institutional and retail.
- Most people who use mutual funds already know the basics of what they are.
Types of Mutual Funds
There are many types of mutual funds, depending on which type of portfolio is being managed by the Investment Manager. There are many types of mutual funds. Some have higher risk returns for long-term investments, while others offer lower yields and risk profiles. There are two types of mutual funds:
Fixed Income Mutual Fund
Fixed income mutual funds are investment products that offer 80% of the capital in the form bonds or sukuks based on debt. It tends to have a stable yield, as the name implies.
Money Market Mutual Fund
Money market funds invest money collected for money market instruments such as Bank Indonesia Certificates or Term Deposits and Bonds that mature in less than one year.
Funds from stock funds can be used to purchase shares on the Indonesia Stock Exchange, as the name implies.
Bond mutual funds also buy securities products, such as bonds and bonds.
Before you invest in mutual funds, ensure that the fund type you choose is compatible with your investment objectives.
Mutual Fund Investment for Beginners
You can now see if funds are right for you by reviewing the information. Don’t be afraid of learning about fund types and customizing them for your investment goals.