Before Mutual Fund Investment, Get to Know These Costs

The world of investment now has many types, so you can freely choose what type of investment you want to use to make a profit, mutual fund investment is one of best choice. Of course, in determining the type of investment, you must also pay attention to your financial power, whether or not you can use the type of investment you will use. If you have a small fund, you can use Mutual Funds as an alternative to investing.


Mutual funds are an alternative investment for the investor community, especially small investors and investors who do not have much time and expertise to calculate their investment risk. Mutual funds exist as a means to collect funds from various capital rates owned by investors who have a minimum investment period and also little knowledge as well.


In addition, mutual funds are also expected to increase the role of local investors to invest in the Indonesian capital market. Generally, an Investment Fund is defined as a container used to collect funds from the investor community for further investment in Securities portfolios by Investment Managers.


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There are several benefits that you can get when choosing Mutual Funds as an investment you make. First, you can diversify investments in the stock exchange, so that you will minimize the risk. Second, Mutual Funds will make it easier for you to invest in the capital market. Third, Time efficiency, Mutual funds managed by managers will make you not have to bother to monitor the investment performance that you have done.


But every time there is a return on investment, there must be a risk that will await you. The risk of mutual funds is the risk of a decrease in unit value that can be caused by the price of securities. Second, Liquidity risk, this risk can occur if there are many investors who want to resell units that have been held, so that managers will have difficulty in providing cash. Third, Default risk, this risk is the worst risk, where there are problems when the mutual fund insurance company does not immediately pay compensation.

## Costs in Mutual Fund Investment

After you see the various benefits and also weigh the risks that exist from mutual fund investments. There are other things you should know before investing in mutual funds. Namely, the problem of costs contained in the Mutual Fund itself. In general there are three types of costs that exist in Mutual Funds which are classified by who pays them. Costs paid by Investors, Mutual Funds and also Asset Management Companies. The following is a description of each fee in the Mutual Fund.

## 1. Costs to be paid by Investors

The first fee is a fee that must be paid by you as an Investor in a Mutual Fund. These costs are charged to each investor. Costs borne by investors are better known by investors, because they can reduce the value of investment and also benefit directly by investors. There are three categories in these costs. Subscription Fee (the cost of purchasing an investment unit). Redemption Fee (Cost of resale of participation units), Switching Fee (Transfer unit fees) as well as bank transfer fees that are related to the transaction.


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## 2. Costs to be paid by Mutual Funds

The point of the fees paid by the Mutual Fund is that the fees are charged to the mutual fund. The net asset value (NAV) per investment unit commonly referred to by investors as the price of mutual funds is the price reduced by these costs. So investors have indirectly paid this fee because it is included in the price of mutual funds.


Because basically Mutual Funds is a company owned by investors who have two main divisions. Investment management division and also custodian bank division. That is why most investors do not know that the costs incurred are also included to fund the activities of the two main divisions.

## 3. Costs to be paid by Investment Managers

At this cost, it is aimed at the initial formation of the Mutual Fund and also for promotional purposes. When forming an Investment Fund, the investment manager will make a contract with a custodian bank with the aim of providing funds management services collectively. Therefore, contracts in Mutual Funds are collective (KIK). It also uses the services of legal consultants and notaries in the process of making Mutual Funds.

After the mutual fund is formed, for operational needs, it certainly requires HR and also promotion. The funds used in the process are all borne by investment management. After the mutual fund is formed, for operational needs, it certainly requires HR and also promotion. The funds used in the process are all borne by investment management.

After you know all kinds of costs in Mutual Funds and understand them. You will be more confident to use Mutual Funds as a form of investment.




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## How to Calculate Mutual Fund NAV?


NAV stands for net asset value, or for you mutual fund players who are not majoring in economics, NAV can also be called NAV or net asset value. Net asset value is the current value of the mutual fund, in which the mutual fund can be in the form of valuable values ​​such as shares, money market securities, bonds and deposits contained in the mutual fund, summed with dividends and or bond coupons obtained then deducted by operating costs that the mutual fund can in the form of Investment Manager fees, Custodian Bank fees, and other costs.


## Mutual Fund NAV Short Calculation

To make it easier to explain the following NAV calculations, a sample case can be used as a reference for example in a mutual fund consisting of companies A, Company B, and Company C. Each of these companies has 100 shares. The three companies are also assumed to have no obligations to pay. One day the three companies have the following market values.


Company A has a value of 60 dollars x 100 pieces = 6,000 dollars

Company B has a value of 70 dollars x 100 pieces = 7,000 dollars

Company C has a value of 80 dollars x 100 pieces = 8,000 dollars

Then the mutual fund has a portfolio value of 21,000 dollars.

Then let’s say the mutual fund issues 1,000 shares.


From the above data, the NAV value per share can be calculated as follows.

NAV = (total assets of mutual funds – liabilities) / number of shares outstanding

NAV = ($ 21,000 – $ 0) / 1000 shares

NAV = 21 dollars

Obligations or liabilities worth 0 dollars because in the case has been mentioned that company A, company B, Company C does not have obligations that must be paid. Knowing how to calculate net asset value certainly makes it easier for you as an investor to find out how much your investment is worth.


For example, you are a mutual fund investor that has 10 percent of mutual funds in circulation, which means you have 10% x 1000 shares = 100 shares. Then the value of your investment is $ 21 x 100 pieces = 21,000 dollars.

If you are a beginner investor, then what you need to underline is. The size of an NAV from a mutual fund cannot be an inexpensive or expensive benchmark for a mutual fund. The size of the NAV of a mutual fund only serves as a benchmark value when you want to sell or buy mutual funds.


An investor will certainly make the size of the NAV of a mutual fund to assess the performance of the mutual fund. Apart from the NAV, there are also two more points used to assess the performance of a mutual fund, namely capital gains and dividends.


Capital gains are capital gains received by investors when selling mutual funds or stocks. Capital gain can be a benchmark of the performance of mutual funds, the greater the value of capital gains, the better the performance of the mutual fund.


Dividends are returns given from a company for the investment you give to that company. This dividend comes from profits derived from the company. The value of this dividend is not absolute and depends on the performance of the company. So that dividends can also be used as a benchmark for the performance of a company. The greater the dividend you get, the better the performance of the company.


That was a brief explanation of net asset value or NAV, or it could be called net asset value (NAV). Knowing the NAV calculation is very useful for those of you who are experienced investors and those who are still learning.

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