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Mutual Funds

Mutual Funds. Oki Purworiana MA0N0206. Mutual Funds. An investment alternative for investors Small investors Those who have less time & skill to count the risks of their investments

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Mutual Funds

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  1. Mutual Funds Oki Purworiana MA0N0206

  2. Mutual Funds • An investment alternative for investors • Small investors • Those who have less time & skill to count the risks of their investments • A tool to gather fund from public that have the capital, will to invest, but only have limited time & knowledge • Capital Market Law No.8/1995 section 1 clause (27) regarding Mutual Fund • Mutual Fund collects fund from the society. • The fund is invested in the securities portfolio. • The fund is managed by an Investment manager.

  3. Benefits • Investor with a smaller budget can do investment diversification in their securities to minimize the risks • Helps the investor to invest in capital market easier • Time efficiency

  4. Risks • Risk of decreased value of participating unit  influenced by the decrease price of securities • Liquidity risk  related to the difficulty faced by the fund manager if most of the unit holders resell their unit • Default risk  when the company that insures the MF’s wealth doesn’t pay the indemnity or pay lower than the loading value

  5. Types of Mutual Funds • Money Market Funds • Invests on debt securities • The maturity date is <1year • The target is to keep the liquidity and maintain the capital. • Fixed Income Funds • Invests at least 80% of its assets in debt securities • The maturity date is 1-3 years • Has higher risk than money market funds • The purpose is to produce a stable return • Equity Funds • Invest at least 80% of its assets in equities • The maturity date is >3years • Has higher risks than the previous two types, but it gives higher rate of return. • Mixed Funds • invest in a combination of stocks and bonds, to capture the income generation strengths of both asset classes with less volatility • The maturity date can be 1 year or more

  6. Commercial Banks

  7. Example

  8. Facts • 2011 : Increased 13% to 168.2 trillion rupiah ($18.7 billion), 36% of that was in stocks • 2012 : May grow as much as 20%

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