Mutual Funds are an instrument that raises investor funds which will then be distributed or placed in various investment instruments by the Investment Manager. One type of Mutual Funds is the Equity Mutual Fund.
This type of Mutual Fund is more volatile or less stable than the others. One of the factors that lead to declining profit is the economic situation. Even though the funds have been spread across various types of investments, the risk of loss will remain.
That’s why you need to know the factors that cause Mutual Fund performance to decline, and how you can anticipate losses.
This Mutual Fund is a type of Mutual Fund with a high potential return. Therefore, you can use it to grow the value of your assets.
However, this high potential comes with high risks. Here are some factors that you should know about Equity Mutual Fund.
Factors Causing the Declining Performance of Equity Mutual Funds
To understand the chances of success and loss of Mutual Fund investment, the following factors can be your reference for analysis. When investing in Mutual Funds, you also need to know what things make their value fluctuate as follows.
- Capital Market Performance
The performance of the capital market is very influential or a major factor in the performance of Mutual Funds. You need to know the movement of the Composite Stock Price Index (IHSG) to find out whether Mutual Fund performance is rising or falling.
IHSG will increase if market conditions are quite positive. Conversely, it will decrease if market conditions are in a negative position. Apart from having an important effect on equity type Mutual Funds, the IHSG also has an effect on other types of Mutual Funds.
- Investment Manager Performance
The Investment Manager is one of the important factors in Mutual Fund investment. Make sure the Investment Manager is experienced and has expertise in managing investments.
You can assess the Investment Manager's portfolio and their ability to choose securities, know the best time to sell and buy securities, and their trustworthiness. Therefore, you can invest wisely, especially in choosing Investment Manager services.
- Interest Rate Factor
The movement of interest rates is very important, especially to determine the most appropriate type of Mutual Fund. For example, Equity Mutual Funds will increase when interest rates decrease.
This is because lower interest rates make stock and Bond prices increase.
Those are some of the things that affect the fluctuations in Mutual Fund performance. After knowing some of these things, you must also consider the steps or alternative ways that must be taken when Mutual Funds go through a decline.
For that, here are some things you need to do when the performance of your Mutual Funds are declining.
Things to Do When Mutual Fund Performance Declines
What is an Equity Mutual Fund? This type of Mutual Fund invests 80 percent of its assets in the form of stock or equity securities.
This Mutual Fund moves like stocks. This type of Mutual Fund has relatively high fluctuations, which means it can increase and decrease in a relatively short time span.
Because of this, you need to know what steps to take when Mutual Fund performance declines, which will be explained as follows:
- Know the Purpose of Your Mutual Fund Investment
If you are investing for your children's education with a long-term equity-type Mutual Fund, then the decrease in value shouldn’t worry you.
A decline in Mutual Fund investment can occur, especially in long-term investments. However, it can return to normal within one to two years. Therefore, you don't need to rush to sell your Mutual Funds.
- Top Up Your Investment
Topping up investment when Mutual Fund performance is down is not a bad move. Especially if your goal is in the long term, adding investment is better than withdrawing the funds you have.
Even though Mutual Fund performance is currently declining, one day it will experience an increase or rebound.
- Not Cutting the Investment Budget
Mutual Fund investment is certainly not always profitable, there will be a risk of loss that must be faced. However, cutting the budget for Mutual Funds also reduces the chances of making a profit.
In fact, Mutual Fund investment already has a fairly low risk, so it is the right choice for you.
- Change the Mutual Fund Type
You can also change the type of investment when the risk is too high. There are types of Mutual Funds that have a lower risk, such as Money Market and Fixed Income Mutual Funds.
These types of Mutual Funds are safer if you are not ready for the high risks involved. But please note, these types of Mutual Funds are usually intended for investment with a fairly short period of time.
- Start Improving Your Finances
When Mutual Fund performance decreases and you don't gain investment returns, allocate some funds in instruments that are guaranteed to be safer, such as Fixed Deposits, gold, or keeping it in savings.
Managing finances wisely can minimize your potential losses. Those are the steps you can take when the performance of Mutual Funds is declining and has a negative value.
The solution is not just to stop investing or selling it. With broader insights about Mutual Funds, you can decide which steps to take later.
In investing, fluctuating value is a normal thing to happen. Even so, Mutual Funds are still the choice of many people because of their advantages. The advantages of Mutual Fund investment include:
- Flexible, various types of Mutual Funds with short to long term.
- The investment process is relatively easy.
- Lower risk due to the diversification.
- Disbursement of Mutual Funds is relatively easy and fast.
Already Understand Equity Mutual Funds? Time to Invest with DBS Treasures
DBS Treasures is priority banking that can support you in Mutual Fund investment. The advantages if you become a DBS Treasures priority banking customer include the following:
- Investments Are Managed by Professionals
Investment options are managed by professional Investment Managers to ensure optimal investment management.
- Provides Insights to Support Your Investment
You will get curated and momentous insights and opportunities from a reliable team of experts in the financial sector, so you can confidently make the right move at the right time.
- Reduces Risk through Diversification
Diversification is done by spreading your funds across various types of investment assets to minimize the risks involved.
- Easy Transactions through the digibank by DBS Application
Transactions are easy to do through the digibank by DBS application, starting from selling, buying, to switching. Apart from that, you can also do the SID registration process. Note that the SID (Single Investor Identification) is an identity that investors must have to transact in the capital market.
Those are the advantages you can gain when you invest in Equity Mutual Funds with DBS Treasures. Mutual Fund Investment is the right choice for those of you who need practicality and lower risk of loss.
For more comprehensive and accurate information about Mutual Fund investments, you can visit the following link https://www.dbs.id/id/treasures/investasi/mutual-funds/what-is-mutual-funds-and-equities.
Wait no more, invest in Mutual Funds confidently with DBS Treasures and gain the benefits.
