Mutual funds is the management of container and the pattern of fund / investor capital for a group to invest in investment instruments available in the market by buying mutual fund units. These funds then managed by the Investment Manager (MI) into the investment portfolio, whether it be stocks, bonds, money market or securities / other security.
there are three important elements in terms of Mutual Fund are:
1. The existence of a collection of public funds, both individual and institutional
2. Joint investment in the form of a portfolio of securities that have diversified; and
3. Investment managers believed to be the fund manager owned by the investor community.
In mutual funds, investment management managing funds placed in securities and realize gains or losses and receive dividends or interest dibukukannya into the "Net Asset Value (NAV) fund it.
Wealth mutual funds managed by investment managers are required to be stored in the custodian banks that are not affiliated with the investment manager, custodian bank where this will act as a collective and day care administrator.
History of Mutual Funds
The first mutual fund called the Massachusetts Investors Trust, published on March 21, 1924, which only has a year of 200 mutual fund investors with total assets worth U.S. $ 392,000.
In the year 1929 when the stock market fell this mutual fund industry growth to be slowing. Responding to the collapse of the stock then the U.S. Congress issued Law Securities in 1933 (the Securities Act of 1933) and Law on Stock Exchange in 1934 (the Securities Exchange Act of 1934).
Based on the mutual fund rules must be registered with the Securities and Exchange Commission or the SEC is usually called a commission in the U.S. who handle securities trading and capital markets. Also also, the publisher is obliged to provide mutual fund prospectus contains information to mutual fund disclosure, also includes securities which is the object under management, information on investment managers published a mutual fund.
The SEC is also involved in drafting the Act of 1940 Investment Company is a reference to the provisions which must be fulfilled for each registration fund to this day.
With the restoration of market confidence in the stock market, mutual funds began to grow and develop. Until the end of the year 1960 has been estimated there are about 270 mutual funds with funds under management of 48 trillion U.S. Dollars.
Index mutual funds were first introduced in 1976 by John Bogle with a First Index Investment Trust, which is now called the Vanguard 500 Index Fund is a mutual fund with the largest managed funds reached 100 billion U.S. Dollar.
One of the biggest contributors of the growth of mutual funds in America with the provisions on individual retirement accounts (individual retirement accounts - IRA) [1], which adds the provisions into the Internal Revenue Code (tax laws in the United States) that allow individuals (including those who already have company pension plan) to set aside for U.S. $ 4000 a year.
1. The existence of a collection of public funds, both individual and institutional
2. Joint investment in the form of a portfolio of securities that have diversified; and
3. Investment managers believed to be the fund manager owned by the investor community.
In mutual funds, investment management managing funds placed in securities and realize gains or losses and receive dividends or interest dibukukannya into the "Net Asset Value (NAV) fund it.
Wealth mutual funds managed by investment managers are required to be stored in the custodian banks that are not affiliated with the investment manager, custodian bank where this will act as a collective and day care administrator.
History of Mutual Funds
The first mutual fund called the Massachusetts Investors Trust, published on March 21, 1924, which only has a year of 200 mutual fund investors with total assets worth U.S. $ 392,000.
In the year 1929 when the stock market fell this mutual fund industry growth to be slowing. Responding to the collapse of the stock then the U.S. Congress issued Law Securities in 1933 (the Securities Act of 1933) and Law on Stock Exchange in 1934 (the Securities Exchange Act of 1934).
Based on the mutual fund rules must be registered with the Securities and Exchange Commission or the SEC is usually called a commission in the U.S. who handle securities trading and capital markets. Also also, the publisher is obliged to provide mutual fund prospectus contains information to mutual fund disclosure, also includes securities which is the object under management, information on investment managers published a mutual fund.
The SEC is also involved in drafting the Act of 1940 Investment Company is a reference to the provisions which must be fulfilled for each registration fund to this day.
With the restoration of market confidence in the stock market, mutual funds began to grow and develop. Until the end of the year 1960 has been estimated there are about 270 mutual funds with funds under management of 48 trillion U.S. Dollars.
Index mutual funds were first introduced in 1976 by John Bogle with a First Index Investment Trust, which is now called the Vanguard 500 Index Fund is a mutual fund with the largest managed funds reached 100 billion U.S. Dollar.
One of the biggest contributors of the growth of mutual funds in America with the provisions on individual retirement accounts (individual retirement accounts - IRA) [1], which adds the provisions into the Internal Revenue Code (tax laws in the United States) that allow individuals (including those who already have company pension plan) to set aside for U.S. $ 4000 a year.
Characteristics of Mutual Fund
Based on the mutual fund characteristics can be classified as follows:
Open Mutual Fund
are mutual funds that can be sold back to the Investment Management Company who published it without going through the mechanism of the effect of trade on the Stock Exchange. Its selling price is usually equal to the net asset value. Most of the existing mutual fund is an open fund.
Mutual Funds Closed
are mutual funds that can not be sold to an investment management company that published it. Closed mutual fund units can only be resold to other investors through the mechanism of the Stock Exchange trading. Its selling price could be above or below net asset value.
Types of Mutual Funds
1. Fixed Income Mutual Fund.
Mutual funds that invest at least 80% of managed funds (assets) are in the form of debt securities.
2. Mutual fund shares.
Mutual funds that invest at least 80% of the funds are managed in equity securities.
3. Mixed mutual funds.
Mutual fund with a target asset allocation ratio of stocks and securities fixed income that can not be categorized into three other mutual funds.
4. Money Market Mutual Fund.
Mutual funds are investments are invested in debt securities with a maturity of less than one year.
Net Asset Value
NAV (Net Asset Value) is one measure to monitor the result of a mutual Dana.NAB per share / unit of participation is a reasonable price from a Mutual Fund portfolio after deducting operating expenses and then divided by the number of shares / units has been outstanding (investor owned) at that time.
Based on the mutual fund characteristics can be classified as follows:
Open Mutual Fund
are mutual funds that can be sold back to the Investment Management Company who published it without going through the mechanism of the effect of trade on the Stock Exchange. Its selling price is usually equal to the net asset value. Most of the existing mutual fund is an open fund.
Mutual Funds Closed
are mutual funds that can not be sold to an investment management company that published it. Closed mutual fund units can only be resold to other investors through the mechanism of the Stock Exchange trading. Its selling price could be above or below net asset value.
Types of Mutual Funds
1. Fixed Income Mutual Fund.
Mutual funds that invest at least 80% of managed funds (assets) are in the form of debt securities.
2. Mutual fund shares.
Mutual funds that invest at least 80% of the funds are managed in equity securities.
3. Mixed mutual funds.
Mutual fund with a target asset allocation ratio of stocks and securities fixed income that can not be categorized into three other mutual funds.
4. Money Market Mutual Fund.
Mutual funds are investments are invested in debt securities with a maturity of less than one year.
Net Asset Value
NAV (Net Asset Value) is one measure to monitor the result of a mutual Dana.NAB per share / unit of participation is a reasonable price from a Mutual Fund portfolio after deducting operating expenses and then divided by the number of shares / units has been outstanding (investor owned) at that time.
Benefits of Mutual Funds
Mutual Fund has several benefits that make it as one of the attractive investment alternatives include:
1. Managed by professional management
The management of a mutual fund portfolio held by the Investment Manager who are specialized expertise in fund management. Investment Manager role is very important because the individual Investors generally have a limited time, so can not do research directly in analyzing the effects of price and access to capital market information.
2. Investment Diversification
Diversification, or spreading investments embodied in the portfolio will reduce risk (but not eliminate), because the funds or assets invested in mutual funds a variety of effects that the risks were too scattered. In other words, the risk is not as big a risk when buying one or two types of stocks or individual securities.
Mutual Fund has several benefits that make it as one of the attractive investment alternatives include:
1. Managed by professional management
The management of a mutual fund portfolio held by the Investment Manager who are specialized expertise in fund management. Investment Manager role is very important because the individual Investors generally have a limited time, so can not do research directly in analyzing the effects of price and access to capital market information.
2. Investment Diversification
Diversification, or spreading investments embodied in the portfolio will reduce risk (but not eliminate), because the funds or assets invested in mutual funds a variety of effects that the risks were too scattered. In other words, the risk is not as big a risk when buying one or two types of stocks or individual securities.
3. Transparency Information
Mutual Funds are required to provide information on portfolio development and costs continuously, so holders of Units can monitor the benefits, costs, and risks of each Fund shall saat.Pengelola announced Net Asset Value (NAV) every day in newspapers and publishing the annual financial statements prospectuses and annual and regular basis so that investors can monitor the progress of its investments on a regular basis.
4. High Liquidity
In order to be successful investments, each investment instrument must have a sufficient level of liquidity high. Thus, Investors can melt back its participation unit at any time according to provisions made by each Mutual Fund making it easier for investors manage cash. Open mutual fund shall buy back its participation unit that is very liquid.
5. Low Cost
Because the mutual fund is a collection of funds from many investors and then managed in a professional, then in line with the potential to make these investments will generate transaction costs also efficiency.
Transaction costs will be lower than if individual investors do their own transactions in the stock.
Mutual Fund Investment Risk
For mutual fund investing, investors must know the types of risks that potentially arise when buying Mutual Fund.
1. Risk reduction NAV (Net Asset Value) Units
The decrease was caused by the market price of investment instruments that are included in the Mutual Fund portfolio has decreased compared to the initial purchase price. Causes of decline in market prices Mutual fund investment portfolios may be caused by many things, among them due to stock market performance is worse, the deteriorating performance of the issuer, political and economic situation of uncertainty, and many other fundamental causes.
2. Liquidity Risk
Potential risks of this liquidity could occur if holders of Units in one mutual fund manager had to do a particular investment fund penarikkan in large numbers on the day and the same time. Term, the Investment Manager has experienced rush (withdrawal of funds en masse) of Investments mutual fund unit. This can happen if there is a negative factor that incredible affect mutual fund investors to sell back the Units mutual funds. These extraordinary factors of a political and economic situation is deteriorating, the closure or bankruptcy of several public listed company shares or bonds to the Mutual Fund portfolio, as well as the Investment Manager dilikuidasinya company as the manager of the Mutual Fund.
Mutual Funds are required to provide information on portfolio development and costs continuously, so holders of Units can monitor the benefits, costs, and risks of each Fund shall saat.Pengelola announced Net Asset Value (NAV) every day in newspapers and publishing the annual financial statements prospectuses and annual and regular basis so that investors can monitor the progress of its investments on a regular basis.
4. High Liquidity
In order to be successful investments, each investment instrument must have a sufficient level of liquidity high. Thus, Investors can melt back its participation unit at any time according to provisions made by each Mutual Fund making it easier for investors manage cash. Open mutual fund shall buy back its participation unit that is very liquid.
5. Low Cost
Because the mutual fund is a collection of funds from many investors and then managed in a professional, then in line with the potential to make these investments will generate transaction costs also efficiency.
Transaction costs will be lower than if individual investors do their own transactions in the stock.
Mutual Fund Investment Risk
For mutual fund investing, investors must know the types of risks that potentially arise when buying Mutual Fund.
1. Risk reduction NAV (Net Asset Value) Units
The decrease was caused by the market price of investment instruments that are included in the Mutual Fund portfolio has decreased compared to the initial purchase price. Causes of decline in market prices Mutual fund investment portfolios may be caused by many things, among them due to stock market performance is worse, the deteriorating performance of the issuer, political and economic situation of uncertainty, and many other fundamental causes.
2. Liquidity Risk
Potential risks of this liquidity could occur if holders of Units in one mutual fund manager had to do a particular investment fund penarikkan in large numbers on the day and the same time. Term, the Investment Manager has experienced rush (withdrawal of funds en masse) of Investments mutual fund unit. This can happen if there is a negative factor that incredible affect mutual fund investors to sell back the Units mutual funds. These extraordinary factors of a political and economic situation is deteriorating, the closure or bankruptcy of several public listed company shares or bonds to the Mutual Fund portfolio, as well as the Investment Manager dilikuidasinya company as the manager of the Mutual Fund.
3. Market Risk
Market risk is the situation when the price of investment instruments has decreased due to declining performance of the stock market or bond market drastically. Another term is the market is experiencing bearish conditions, the prices of stocks or other investment instruments prices decline drastically. Market risk that occurs will indirectly lead to NAV (Net Asset Value) which is in the Mutual Fund Units will decline as well. Therefore, if you want to buy certain types of Mutual Funds, investors should be watching the market trend of the instrument itself Mutual fund portfolio.
Market risk is the situation when the price of investment instruments has decreased due to declining performance of the stock market or bond market drastically. Another term is the market is experiencing bearish conditions, the prices of stocks or other investment instruments prices decline drastically. Market risk that occurs will indirectly lead to NAV (Net Asset Value) which is in the Mutual Fund Units will decline as well. Therefore, if you want to buy certain types of Mutual Funds, investors should be watching the market trend of the instrument itself Mutual fund portfolio.
4. Default Risk
Default risk occurs if the Investment Manager is buying the bonds of issuers that experienced financial difficulties earlier when the company's financial performance is still fine, so the issuers are not forced to pay its obligations. These risks should be avoided by choosing an investment manager purchasing strategy investment portfolio closely.
Exchange Traded Fund
Exchange traded fund (ETF) [2] is a mutual fund that is an innovation in the mutual fund industry in nature similar to a public company in which its participation units can be traded on the exchange.
This ETF is a mutual fund is a combination of closed and open mutual funds, and this ETF is a mutual fund is usually referring to the stock index.
Default risk occurs if the Investment Manager is buying the bonds of issuers that experienced financial difficulties earlier when the company's financial performance is still fine, so the issuers are not forced to pay its obligations. These risks should be avoided by choosing an investment manager purchasing strategy investment portfolio closely.
Exchange Traded Fund
Exchange traded fund (ETF) [2] is a mutual fund that is an innovation in the mutual fund industry in nature similar to a public company in which its participation units can be traded on the exchange.
This ETF is a mutual fund is a combination of closed and open mutual funds, and this ETF is a mutual fund is usually referring to the stock index.
This ETF is more efficient than conventional mutual funds as we know it today, where the mutual fund units is always a new issue every day and buy back the units sold by the holders (the investment manager to sell securities which are mutual fund assets to meet its obligation to buy units sold, while the ETF units are traded directly on the exchange every day (like a closed fund, which shall not be sold to the investment manager)
In Indonesia, this ETF is called "Mutual fund collective form of investment contracts that its participation units traded on the stock exchange", and on Monday December 4, 2006, Capital Market Supervisory Agency (Bapepam) has issued a new rule is rule number IV.B.3 on "Mutual Fund form of collective investment contract its participation units traded on the Stock Exchange".
In Indonesia, this ETF is called "Mutual fund collective form of investment contracts that its participation units traded on the stock exchange", and on Monday December 4, 2006, Capital Market Supervisory Agency (Bapepam) has issued a new rule is rule number IV.B.3 on "Mutual Fund form of collective investment contract its participation units traded on the Stock Exchange".
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