Mutual funds are places that are used to raise funds from a group of people or the public which will then be invested in securities portfolios by investment managers. Securities portfolios in the form of marketable securities such as stocks, bonds, securities, deposits and the like, where the mutual funds place investments and represent movable assets. Before you are interested in more deeply, it would be better if you study the types of mutual funds, so that you are right to make an investment.
The investment manager is the party that manages the securities portfolio based on the results of mutually agreed upon investment policies and is responsible for mutual fund performance. In this case the investment manager is also in charge of deciding which shares to buy, sell or hold.
1. Money Market Mutual Funds
Money market mutual funds for a 100% allocation of funds in money market instruments, such as deposits, or bonds with maturities of less than one year.
2. Fixed income mutual funds
Minimum fund allocation that occurs is 80% in bond instruments. The advantages of these types of mutual funds are, in accordance with the medium-term investment objectives of the estimate of 1-3 years and the distribution of cash benefits or additional units that are distributed periodically.
3. Protection mutual funds
Provides protection against the initial investment value of the unit holder with the participation of its portfolio mechanism by investing funds in Debt Securities which will be categorized as investment grade. The advantage is that the returns are more measurable within a certain investment period.
4. Mutual funds are mixed
In general, the maximum fund allocation is 79% for each money market instrument, bonds or stocks. The advantage is that it is in accordance with the medium to long term investment objectives of 3-5 years and the asset allocation is more flexible so that it tends to be more adaptive to market conditions.
Read also: Terms in Mutual Fund
5. Index mutual funds
Minimum fund allocation is 80%. In this case the assets must be invested in accordance with the existing assets in the reference index which is called passive management. It aims to obtain investment returns that are similar to the reference index, both the bond index and the stock index. It is almost similar to an open mutual fund, it can be bought and sold at any time on every stock market day of the stock market. The advantage is in the nature of investment transparency and choosing passive management for maximum results.
6. Equity mutual funds
Minimum fund allocation is 80% in stock instruments. The growth potential is relatively high because it tends to be aggressive. The advantage is long-term investment, that is, over 5 years, with an aggressive risk profile.
This is the explanation regarding the types of mutual funds so that potential investors can further understand and choose wisely the type of mutual funds they want in accordance with existing finances and as needed. Do a more in-depth analysis before deciding that the results will be satisfied. Hopefully the information above can be useful.