FROM PT SUPERMARKET REKSADANA INDONESIA (SMARD's) WEBSITE
What is a Mutual Fund?
You've probably heard of a Mutual Fund, but what is it exactly?
Based on Indonesian Constitution on Capital Markets (Undang-Undang Pasar Modal No. 8 1995, article 1, paragraph 2):
"A mutual fund is defined as a vehicle used to raise funds from public investors to be invested into a securities portfolio by an Investment Manager."
An investment manager is an institution that manages mutual funds. Simply put, in a mutual funds investment, the investment manager collects money from a number of investors, such as yourself, and then manages this money by investing it in various investment instruments such as shares, bonds, and or time deposits.
A Mutual Fund is an appropriate investment alternative for anyone interested in owning shares, bonds, or other securities, which may be difficult to carry out on your own. Because it is managed by an investment manager, Mutual Funds provide the most comfort and ease for investors who don’t have much time or expertise in investing.
"How do you calculate the ownership of a mutual fund? Even if it is managed by an investment manager, I need to know how to calculate it.”
The total net managed funds handled by investment manager is referred to as NAV (Net Asset Value). NAV is calculated based on the total market price of all the underlying securities (bonds, shares, and time deposits) in the Mutual Funds portfolio. This includes the interest earned—minus operating costs such as management fees, custodian fees, taxes, and others. NAV is the net value and no longer subject to tax.
The single unit of mutual fund ownership is called an Investment Unit (IU). The price of one IU in a Mutual Funds product is obtained from Total NAV divided by IU. The price of one IU in a mutual funds product is obtained from Total NAV divided by the total IU’s. An IU is often called the Net Asset Value per Investment Unit (NAV/Unit).
Example:
You own 1,000 IUs of mutual fund X.
The NAV/Unit of mutual fund X is Rp 1,300.
Your nominal investment value in mutual fund:
X = 1,000 x Rp.1,300 = Rp 1,300,000.
The NAV/Unit will fluctuate daily according to the market price of the underlying investment instruments in the portfolio.
For example, mutual fund X contains A, B, C shares. Should the price of A, B, C shares increase, then the NAV/Unit of mutual fund X will also increase accordingly. If the NAV/Unit of mutual fund X increases to Rp 2,300, the value of mutual fund X that you own becomes 1,000 x Rp 2,300 = Rp 2,300,000.
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