Plenty of mutual fund products to choose from

The Jakarta Post , Jakarta | Mon, 10/01/2007 3:43 PM | Business

Ever since the first ""BDNI Reksa Dana"" was launched in 1995, the number of mutual fund products has continued to grow, reaching 551 -- and counting -- from 75 registered investment houses so far.

That's a platter to choose from, but the whole onslaught of mutual fund products can basically be boiled down to these several types:

* ""Money-market fund"": as the name implies, is a mutual fund whose portfolio is invested wholly into short-term money-market instruments, such as central bank bills, treasury bills, as well as time-deposits and other promissory notes with a maturity of up to one year.

* ""Fixed-income fund"": a mutual fund invested mostly into bonds, be it government or corporate ones. ""High-income funds"" are invested into higher yielding -- but also more riskier -- ""junk bonds"".

* ""Equity fund"": as the name implies again, is a mutual fund with a portfolio of corporate shares. ""Growth funds"" seek out blue-chip stocks or of companies with solid prospects in the long run.

* ""Balanced fund"": strikes a balance by mixing its investments into stocks and bonds.

Apart from the four conventional types of mutual funds, there are also ""structured mutual funds"", which include:

* ""Capital protected fund"": a mutual fund that ensures its investors will receive in return at least as much capital as they had initially put in. ""Guaranteed funds"" actually insure the investor funds with third-parties.

* Index fund: a mutual fund whose portfolio tracks the performance of an index of selected stocks.

Having known the types of mutual funds, it's now time to seek a trusted fund manager, read the prospectus of mutual funds on offer, and suit them with your investment needs.

-- Urip Hudiono

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