Types of Mutual Funds
Adri Gunawan
Mutual funds are one of the most popular investment instruments today. This ease of investing makes it so popular. But with the popularity, do you know that mutual funds have various types of mutual funds that you can select. Each mutual fund option that you choose has a different composition of management funds. These differences, of course, have very different levels of risk of loss and profit. By understanding the types of mutual funds, your investment performance will certainly be much more leveraged. Therefore, it's important to know the various types of mutual funds so that your investment choices can be adjusted to the desired investment goals so that they are easily achieved. Here are four types of mutual funds that we often encounter.
1
Money Market Funds
Money market l funds are mutual funds that invest in money market investment instruments with maturities of less than one year. The investment instruments can be in the form of time deposits, Bank Certificates, Money Market Securities, and various other types of money market investment instruments.
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This mutual fund is very suitable for beginner investors because the level of risk is very low but the returns obtained are above deposits, the returns that can gain are around 5% - 7% per year. In addition, this mutual fund can be used as a place for emergency funds or investment plans for less than one year. This very low risk makes it very suitable for various short-term needs.
2
Fixed Income Funds
Fixed-income funds are mutual funds that invest at least 80% of the managed portfolio in bonds. The bonds referred to in the mutual fund investment purposes here include government bonds and corporate bonds. Fixed-income mutual funds have the characteristics of higher potential investment returns than money market mutual funds, while the risk of fixed-income mutual funds is also greater than money market mutual funds.
This mutual fund is suitable for investment purposes in the medium and long term, very suitable as an investment over three years. This is due to the characteristics of bonds, which sometimes fluctuate due to buying and selling bonds in the secondary market, but in the long term, it will produce profitable returns. So that you get maximum results, it is highly recommended as a medium and long investment destination or above three years.
3
Equity Funds
Equity Funds are mutual funds that invest at least 80% of the managed funds in the form of assets in the form of stock. This mutual fund has the highest risk compared to other types of mutual funds, but the potential benefits that can get are also higher, and can be said to be high-risk high-return. This high profit resulted from capital gain, sale of shares, and dividends.
Equity Funds are very suitable for long-term investments over five years. Changes in stock prices that are very volatile make stock mutual funds have high fluctuations as well. Therefore, equity mutual fund investments are only suitable for the long term. Price changes in stock mutual funds tend to be difficult to predict, but in the long term, they will provide maximum results.
4
Balanced Funds
Balanced funds is a type of mutual fund that allocates its investment funds in a variety of portfolios. Investment instruments can be in the form of stocks, money markets, or bonds. This mutual fund has the freedom to determine the distribution in asset allocation so that at any time it can have an investment portfolio with a majority of stock and at other times change it so that it becomes a majority of bonds.
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Mixed mutual funds are very suitable for medium-term investments of 3-5 years. This is because the fluctuations that occur from mixed mutual funds can be overcome by investment managers to divide their investment funds into different instruments. In addition, the yields obtained can be higher than fixed income mutual funds, of course, this is very tempting.