√ Definition of Mutual Funds, Types, Characteristics, Benefits and Risks
Understanding Mutual Funds, Types, Characteristics, Benefits & Risks – In this discussion, we will explain about mutual funds. An explanation that includes the meaning of mutual funds, types of mutual funds, characteristics of mutual funds, benefits and risks of mutual funds which will be discussed in full and easy to understand.
Understanding Mutual Funds, Types, Characteristics, Benefits & Risks
For more details, see the review below carefully.
Definition of Mutual Funds
Let's discuss the meaning of mutual funds first.
Wikipedia
The definition of mutual funds according to Wikipedia is a container and pattern of fund/capital management for a group of investors to invest in investment instruments available on the market by purchasing units of participation mutual funds
Capital Market Law no. 8 of 1992
The definition of mutual funds according to Capital Market Law no. 8 of 1995 is the container used for collect funds from the Investor community to be invested in Securities portfolios by Managers Investment.
Mutual Fund Types
Mutual funds can be divided into several types, namely:
1. Stock Mutual Funds
Equity mutual funds are mutual funds that invest at least 80% of the portfolio they manage in equity securities (shares). Stock securities generally provide higher yield potential in the form of capital gains, growth in stock prices and dividends. The investment value in stock mutual funds has the greatest growth but the risk is also great.
2. Mixed Mutual Funds
Mixed mutual funds are a type of mutual funds that invest in equity securities and securities debt whose comparison is not included in the category of fixed income mutual funds and mutual funds share. Theoretically, the yield potential of this mutual fund can be greater than fixed income mutual funds, but smaller than equity funds.
3. Fixed Income Mutual Funds
Fixed income mutual funds are a type of mutual fund that invests at least 80% of the portfolio they manage in debt securities. The investment risk is higher than money market mutual funds which create a return value for mutual funds this type is also higher, but still lower than mixed funds and mutual funds share.
4. Money Market Mutual Funds
Money market mutual funds are mutual funds that invest 80% in debt market securities with a term of less than one year, such as deposits, SBI. The risk of this type of mutual fund is the lowest but also provides a limited return.
5. Index mutual funds
Index mutual funds are mutual funds whose contents are mostly from a certain index and are managed passively, meaning they do not buy or sell on the exchange, unless there is a new subscription or redemption, therefore index mutual funds usually gain and lose in line with the index the
Characteristics of Mutual Funds
The characteristics of mutual funds can be classified into:
-
Open Mutual Fund
It is a mutual fund that can be sold back to the Investment Management Company that issued it without the need to go through trading on the stock exchange. The selling price of open mutual funds is the same as the Net Asset value. The existing mutual funds are open-ended mutual funds.
-
Closed Mutual Funds
It is a mutual fund that cannot be resold to the investment management company that issued it. Closed mutual fund units can be resold to other investors by trading on the Stock Exchange. And the selling price can be above or below the net asset value.
Mutual Fund Benefits
The following are some of the benefits of having a mutual fund that make it an alternative investment:
-
Managed By Professional Management
In mutual funds, portfolio management is carried out by Investment Managers who are specialists in fund management. The role of an investment manager is very important considering that individual investors generally have limited time, so that they cannot conduct research directly in analyzing securities prices and accessing information on the market capital. -
Investment Diversification
Diversification or spread of investment materialized in the portfolio will reduce the risk (but not eliminating), because mutual fund funds or wealth are invested in various types of securities so that the risks are also also big. -
Information Transparency
Mutual funds must provide information on the development of their portfolio and costs continuously so that unit holders can monitor the benefits, costs and risks at any time. -
High Liquidity
In order for the investment to be successful, each investment instrument must have a fairly high level of liquidity. -
Low Cost
Because mutual funds are a collection of funds from many investors and are then managed professionally in line with the magnitude of the ability to make these investments will also result in cost efficiency transaction.
Mutual Fund Risk
In mutual funds there are risks that must be known by investors. The following are the risks in buying mutual funds:
-
Risk of Decreasing Net Asset Value (NAV)
This decrease was due to the decrease in the market price of the investment instruments included in the mutual fund portfolio compared to the initial purchase price. It was caused by many things, including the deteriorating performance of stock workers. -
Liquidity Risk
Potential liquidity risk can occur if the Participating Unit holder in the mutual fund is one of them Certain Investment Managers were found to be withdrawing large amounts of funds on a day and time basis the same one. -
Market Risk
Market risk is a situation when the price of an investment instrument decreases due to a drastic decline in the performance of the stock market or bond market. -
Default Risk
This risk occurs when the Investment Manager buys bonds belonging to issuers who are in financial trouble Previously, the company's financial performance was still fine so that the issuer was forced not to pay his obligations.
That's how it was explained about Understanding Mutual Funds, Types, Characteristics, Benefits & Risks, hopefully can add to your insight and knowledge. Thank you for visiting
List of contents
Recommendation:
- √ Definition of Leverage, Types, Purpose and Benefits Definition of Leverage, Types, Purpose and Benefits - On this occasion, Around Knowledge will discuss Leverage. Which in the discussion this time explains the meaning of leverage, purpose, type, benefits by...
- √ Definition of Social Capital, Functions, Elements and Types Definition of Social Capital, Functions, Elements and Types - In this discussion, Around Knowledge, we will discuss Social Capital. Which includes the meaning, function, elements and types of social capital with a complete discussion and...
- Friendship Short Stories: Definition, Writing Tips and Examples Friendship Short Stories: Definition, Writing Tips and Examples - What are Friendship Short Stories like? On this occasion, Seputarknowledge.co.id will discuss whether it is the Short Story of Friendship and other things about it. Let's see together…
- √ 40 Definitions of International Relations According to Experts… 40 Understanding of International Relations According to Experts (Complete) - On this occasion we will discuss material about international relations. International Relations is a relationship between nations or a human-human interaction…
- √ 11 Definitions of Political Culture According to Experts, Types,… 11 Definition of Political Culture According to Experts, Types, Characteristics, Components, Types and Examples - In this discussion we will explain about political culture. The discussion includes the notion of political culture, types,…
- √ 26 Definition of Receivables According to Experts (Discussion of… 26 Definition of Accounts Receivable According to Experts (Full Discussion) - In this discussion, we will explain accounts receivable. Explanation which includes the definition of accounts receivable which is based on the opinions of experts who are complete and…
- Vector: Definition, Material, Formulas and Example Problems Vector: Definition, Material, Formulas and Example Problems - What is meant by Vector in operation mathematics? On this occasion, Around the Knowledge.co.id will discuss vectors and other matters about it.…
- √ 15 Definitions of Competence According to Experts, Types, Benefits… 15 Definition of Competence According to Experts, Types, Complete Benefits - On this occasion we will discuss competence. The discussion includes the meaning, types, benefits which will be explained in full.
- √ Definition of Economic Resources, Classification of Types &… Definition of Economic Resources, Classification of Types & Roles - In this discussion we will explain about Economic Resources. Which includes the definition, classification of types and roles of economic resources by…
- DNA and RNA: Definition, Characteristics, Differences and… DNA and RNA: Definition, Characteristics, Differences and Discussion of the Process - What are the meanings and differences of DNA and RNA? On this occasion, Seputarknowledge.co.id will discuss it and of course other things that...
- Arrangements are: Definition, Types, Structure, Techniques &… Arrangements are: Definition, Types, Structures, Techniques & How to Make them - In this discussion we will explain about Arrangements. An explanation that includes the meaning of arrangements, types of arrangements, arrangement structures, techniques…
- √ Types of Financial Institutions in Indonesia and… Types of Financial Institutions in Indonesia and Their Explanations - The financial institution that we know is an entity businesses engaged in the financial sector by providing storage services, distribution and lending of funds to the…
- 14 Definition of Entrepreneur According to Experts (Discuss in full) 14 Definitions of Entrepreneurs According to Experts (Discuss Completely) - We must have heard the word entrepreneur, haven't we? But there are still many who do not understand what an entrepreneur really means. So here we are...
- √ Definition of Short Term Investment, Objectives, Types, Examples... Definition of Short Term Investment, Objectives, Types, Examples, Forms, Characteristics, Means - In this discussion we will explain about investment. Which includes short-term investment definitions, objectives, types, forms, characteristics,…
- √ Definition of Banking Accounting, System Guidelines, Basis,… Definition of Banking Accounting, System Guidelines, Fundamentals, Methods, Application, Objectives & Equations - In this discussion we will explain banking accounting. Which includes the understanding of banking accounting, systems, basics, methods, application,…
- √ Definition of Social Geography According to Experts, Characteristics, Elements… Definition of Social Geography According to Experts, Characteristics, Elements & Concepts - In this discussion we will explain about social geography. An explanation that includes the notion of social geography based on experts, characteristics...
- √ 33 Understanding of Ideology According to Experts (Discussion of… 33 Definition of Ideology According to Experts (Full discussion) - In this discussion we will explain the meaning of ideology according to experts. Ideology was created by Antoine Destutt de Tracy in the twentieth century…
- Business Entity: Definition, Form, Type and Comparison Business Entity: Definition, Form, Type and Comparison - What is meant by a Business Entity? This time around the knowledge.co.id will discuss the Business Entity and the things that surround it. Let's see together…
- Definition of Teacher Certification Definition of Teacher Certification, Benefits, Purpose, Legal Basis, Procedures - In this discussion we will explain Teacher Certification. Which includes the definition of teacher certification, objectives, legal basis, uses or benefits, and…
- √ Definition of Working Capital, Concepts, Types, Benefits, Management… Definition of Working Capital, Concept, Types, Benefits, Management and Use - In this discussion we will explain about Working Capital. Working capital is related to one's field of business to be able to run...
- 8 Best and Guaranteed Stock Trading Application Recommendations… 8 Recommendations for the Best and Guaranteed Safe Stock Trading Application Lately, many people are interested in starting an online stock trading business via smartphone devices. This is of course driven by the presence of the application…
- √ 23 Understanding Libraries According to Experts (Discuss… 23 Definition of Libraries According to Experts (Full Discussion) - In this discussion we will explain about libraries. Explanation of the definition of library based on the most complete opinion of experts. 23 Definition of Libraries According to Scholars…
- √ Definition of Commercial Bank, Duties, Functions, Types and Activities Definition of Commercial Banks, Duties, Functions, Types and Activities - In this discussion, you will learn about Commercial Banks. Which includes the definition, duties and functions, types and activities of commercial banks with…
- Sharia Accounting: Understanding According to Experts, Basic… Syari'ah Accounting: Understanding According to Experts, Legal Basis, Characteristics, Purpose, Principles, Characteristics And The advantages - What is sharia accounting and its advantages? discuss it and...
- 26 Definition of Population According to Experts (Discussion… 26 Definition of Population According to Complete Experts - Usually in making a scientific work or research, there are people who use samples, sampling as well as populations. In this discussion, About Knowledge…
- √ Definition of Business Risk, Type, Classification & Factors… Definition of Business Risk, Types, Classification & Causal Factors - In this discussion we will explain about Business Risk. Which includes the definition of business risk, types of business risk, classification of types of business risk, factors...
- 7 Types of Investment with Advantages and Disadvantages… 7 Types of Investments with Advantages and Disadvantages (Complete) - Everyone wants to have an investment for the long term of their survival. As discussed in the past regarding the notion of investment, there...
- 23 Definitions of Social Change According to Experts (Discuss… 23 Definition of Social Change According to Experts (Discuss Completely) - On this occasion we will discuss a little about social. What we will discuss here is precisely social change, what is it…
- Definition of a Business Plan: According to Experts, Types,… Definition of a Business Plan: According to Experts, Types, Benefits, Framework and Conclusion - What is meant by a Business Plan? On this occasion, Seputarknowledge.co.id will discuss what is meant by the definition of business...
- √ 29 Understanding of Knowledge Management According to Experts… 29 Definition of Knowledge Management According to Experts (Complete) - In this discussion we will explain about knowledge management or knowledge management. Explanations based on expert opinion in full...