The Risks of Mutual Funds
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Mutual funds have become an investment option for some people who expect the growth of his own funds. In addition to not deal directly with the management, as well as the guarantee that the funds managed by investment managers will be more prospects in generating return later in life than when administered alone.
When investing in mutual funds, investors can not control the money directly to determine where the money should be invested. Investors fully devolved control to the other parties, namely the Investment Manager. Investment fund managers as a manufacturer to design a wide range of products with different specifications as well as composition. Product specifications, the composition of investment, as well as anything else about the mutual fund products can be seen in "manual book" called the Mutual Fund Prospectus.
However, like other investments, mutual funds also have their own risk characteristics. Thus investors must recognize the types of risks that potentially arise when buying mutual funds. Among them :
> The risk of decline in NAV (net asset value) of Participating Units
The decrease was caused by the market price of the investment instruments that are included in the portfolio of mutual funds has decreased compared to the initial purchase price. The cause of the decline in market mutual fund investment portfolio may be caused by many things, among them due to the deteriorating performance of the stock market, the performance of the issuer of the deteriorating political situation and an uncertain economy, and many other fundamental causes.
> Liquidity Risk
Potential liquidity risk could have occurred if the Unit holders of mutual funds in one particular investment manager apparently did withdrawal large amounts of funds on the same day and time. In other words, the Investment Manager is experiencing a rush (withdrawal of funds on a large scale) for Participating Units of mutual funds. This can occur if there is a tremendous negative factors that affect mutual fund investors to resell the Participating Units of mutual funds. Extraordinary factors include the form of political and economic situation deteriorated, the closure or bankruptcy of several public listed companies whose shares or bonds to the portfolio of Mutual Funds, Investment Managers and dilikuidasinya company as manager of the Mutual Fund.
> 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. Other terms are the market is experiencing a bearish conditions, ie prices of stocks or other investment instruments have a very drastic price reductions. Market risk that occurs will indirectly lead to NAV (Net Asset Value) which is in 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 mutual fund portfolio of the instrument itself.
> Risk of Default
Risk of Default occurs if the investment manager is buying the bond issuer's financial difficulties while before the company's financial performance is still fine so that the issuer is forced not to pay its obligations. This risk should be avoided by choosing an investment manager that implements the investment strategy of purchasing portfolio closely.
Similarly, some risks may occur and be aware of when deciding to invest in mutual funds. May be useful!
Mutual funds have become an investment option for some people who expect the growth of his own funds. In addition to not deal directly with the management, as well as the guarantee that the funds managed by investment managers will be more prospects in generating return later in life than when administered alone.
When investing in mutual funds, investors can not control the money directly to determine where the money should be invested. Investors fully devolved control to the other parties, namely the Investment Manager. Investment fund managers as a manufacturer to design a wide range of products with different specifications as well as composition. Product specifications, the composition of investment, as well as anything else about the mutual fund products can be seen in "manual book" called the Mutual Fund Prospectus.However, like other investments, mutual funds also have their own risk characteristics. Thus investors must recognize the types of risks that potentially arise when buying mutual funds. Among them :
> The risk of decline in NAV (net asset value) of Participating Units
The decrease was caused by the market price of the investment instruments that are included in the portfolio of mutual funds has decreased compared to the initial purchase price. The cause of the decline in market mutual fund investment portfolio may be caused by many things, among them due to the deteriorating performance of the stock market, the performance of the issuer of the deteriorating political situation and an uncertain economy, and many other fundamental causes.
> Liquidity Risk
Potential liquidity risk could have occurred if the Unit holders of mutual funds in one particular investment manager apparently did withdrawal large amounts of funds on the same day and time. In other words, the Investment Manager is experiencing a rush (withdrawal of funds on a large scale) for Participating Units of mutual funds. This can occur if there is a tremendous negative factors that affect mutual fund investors to resell the Participating Units of mutual funds. Extraordinary factors include the form of political and economic situation deteriorated, the closure or bankruptcy of several public listed companies whose shares or bonds to the portfolio of Mutual Funds, Investment Managers and dilikuidasinya company as manager of the Mutual Fund.
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. Other terms are the market is experiencing a bearish conditions, ie prices of stocks or other investment instruments have a very drastic price reductions. Market risk that occurs will indirectly lead to NAV (Net Asset Value) which is in 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 mutual fund portfolio of the instrument itself.
> Risk of Default
Risk of Default occurs if the investment manager is buying the bond issuer's financial difficulties while before the company's financial performance is still fine so that the issuer is forced not to pay its obligations. This risk should be avoided by choosing an investment manager that implements the investment strategy of purchasing portfolio closely.
Similarly, some risks may occur and be aware of when deciding to invest in mutual funds. May be useful!
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