The Right Time to Switch Money Market Mutual Funds

Mutual Funds have several choices of investment instruments, one of which is Money Market Mutual Funds. This type of Mutual Funds offers potentially competitive returns. The funds that you invest in will be allocated 100% to Bank Indonesia Certificates, Deposits or Bonds with maturities of under one year.

How Money Market Mutual Funds work is that investors deposit funds to the Investment Manager, then the existing funds will be managed and allocated to several instruments. The Investment Manager will then manage your investment funds to the maximum, to generate maximum profit potential as well. As an investor, you will also receive regular reports regarding the performance of your investment portfolio.

Understand Important Terms Before Investing in Money Market Mutual Funds

After knowing what Money Market Mutual Funds are and how Money Market Mutual Funds work, it's a good idea to also know the terms in Mutual Funds. Below are the explanation for some important terms you need to understand.

• Investment Manager, which has been previously mentioned. The actual task of the Investment Manager is to manage investor funds through a securities portfolio. The Investment Manager not only manages money market instruments but also other Mutual Funds options such as Equity, Fixed Income, and Balanced Mutual Funds.

• Investment Manager Representative, as the title implies, are those who already has direct permission from the OJK to represent securities companies. Their duties are almost the same, namely carrying out business activities as an Investment Manager.

• Custodian Bank, is a bank that will provide custody services for securities and other assets that are still related to securities. The function of the bank itself is to be a supervisor and also a custodian of Mutual Funds assets. In addition, the duties of the Custodian Bank are to hold accounts, manage transactions, and record activities related to investors and Investment Managers. Custodian Banks benefit from dividends, interest, and other rights.

• Participation Unit, is a unit term that can show your ownership as a Mutual Funds investor. Usually this Participation Unit is adjusted to the securities portfolio kept at the Custodian Bank. Investors can check the ownership of the Participation Units through a transaction confirmation letter sent by the Custodian Bank or Investment Manager.

• Net Asset Value, this Mutual Funds term is usually abbreviated as NAV. This term is the amount of funds managed by certain Mutual Funds. Usually, the higher the Net Asset Value, the greater the level of investor confidence in Mutual Funds product.

• NAV/PU, Net Asset Value divided by the number of Mutual Funds Participation Units. It can also refer to the Mutual Funds price to show the performance of the selected Mutual Funds. The value of NAV/PU can go up and down. When the NAV/PU increases, then you gain profit as an investor, and vice versa.

• Mutual Funds Selling Agent, is usually in the form of a commercial bank or a securities company, which has collaborated with Investment Managers with the aim of selling investment asset management services. There are Mutual Funds Selling Agents, there are also Mutual Funds Selling Agent Representatives who have the task of marketing services. Both the agent and its representative must have a permit and certification.

• Collective Investment Contract, or KIK is a form of contract between Investment Manager and Custodian Bank. Its own function is to keep a list of the rights and responsibilities of all parties in the contract, not only investors but also Investment Managers.

• Fund Fact Sheet, is a monthly report released by the Investment Manager which is one of its duties. The contents of the report are related to the performance of the selected Mutual Funds, for example you choose to invest in Money Market Mutual Funds. With this report, investors can more easily monitor Mutual Funds performance every month.

• Subscription, also known as buying Mutual Funds. You can buy your own Mutual Funds on the stock exchange days or the days the Indonesia Stock Exchange operates. In addition to subscriptions, there is also a subscription fee, namely the cost of buying Mutual Funds.

• Redemption, apart from buying Mutual Funds, there is of course a sale term. This sale can of course also be done on the stock exchange days. Related to redemption, there is also another term, namely redemption fee which refer to the cost of selling Mutual Funds.

• Switching, is the term for the transfer of Mutual Funds units from one Mutual Funds instrument to another. Switching also has another term, namely switching fee or the cost of switching Mutual Funds. Apart from selling or buying li Mutual funds, of course, this switching activity is very important for investors to do.

The Right Time and Purpose for Switching Money Market Mutual Funds

In the case of Mutual Funds, it is not only important to know when is the right time to sell or buy mutual funds. But you also need to know when to understand the right time to switch.

A simple example is that you currently have a balance in Equity Mutual Funds, then because you feel that Equity Mutual Funds have a high enough risk, you switch to Money Market Mutual Funds. As Money Market Mutual Funds has relatively less risk with the potential for stable returns. Switching Mutual Funds is of course very important.

The goal is to adjust the investment instruments to suit the investor’s risk profile. Generally, novice and experienced investors will have different risk profiles. Novice investors have a conservative risk profile that prefer safe investments.

However, over time, of course, investors' aspirations and opportunities will change. So you may switch to an aggressive risk profile, where you prefer investments with high risk and high potential returns. Switching, of course, is also carried out to secure profits that depend on market conditions and the national economy.

Please note there are several important points that must be known to understand when is the right time to do this switching.

1. Protect Profit

   One of the goals of switching is to secure profit. So you could say, this transfer or switching is done by investors when their high-risk Mutual Funds products already provided sufficient profit.

   Therefore, you can switch to a type of Mutual Funds with a lower risk. Of course, one of the options of low-risk Mutual Funds instruments is Money Market Mutual Funds.

2. Seizing Momentum

   The right time for switching is when you have been monitoring the market. When monitoring, it is likely that you are seeing opportunities for higher-return investments. So at that time you can switch Mutual Funds units with low risk to Mutual Funds with a higher risk profile, in order to be able to get high yield potential as well.

   When you see the potential of decreasing market trend, then switch from Mutual Fund products with high risk to products with low risk. After that, wait until the investment market conditions improve if you want to switch back.

3. Protecting Assets

   When allocating assets, you need to do switching in order to achieve your investment goals. The transfer needs to be done because the growth in the value of the investment will change over time.

   This transfer aims to move Mutual Funds products which allocation targets are already in excess, to the allocation targets that have been set at the beginning. That way, Mutual Funds activities are not only focused on getting Mutual Funds profits, but also protecting Mutual Funds assets that have been traded.

Money Market Mutual Funds Investment through DBS Treasures

After knowing the terms of Money Market Mutual Funds and the right time to do switching, it is also important to choose the right partner when investing. Investment in Mutual Funds is currently very easy because it can be done through an application. For the right partner you can count on DBS Treasures priority banking.

At DBS Treasures you can find the following advantages.

• Professionally managed investment

  The first advantage of Mutual Funds investment with DBS Treasures is that your investment will be managed by professional Investment Managers. These Investment Managers will strive for more optimal product performance results.

• Investment guide
  

  Even if you are an investor who has been investing in Mutual Funds for a long time, investment insights and guidelines can support you to invest properly. That's why DBS Treasures has a team of reliable and proactive financial experts. This expert team will communicate the most up-to-date market analysis as well as the latest opportunities that have been tailored to your preferences and aspirations. You can use it to determine the right moment to buy and sell Mutual Funds or the right switching momentum of Mutual Funds.

• Reduce risk through diversification

  Another advantage with DBS Treasures is that it can reduce risk through diversification. Diversification is the spread of your funds across different types of investment assets. In this way, you as an investor can still save your assets, even though the investment value of Mutual Funds in the market is on the downtrend.

• Easy transaction process

   

  Lastly, you can invest very easily through the digibank by DBS Application from DBS Treasures. All Mutual Funds investment transactions, not only for selling Mutual Funds, but also buying and switching Mutual Funds, can be done through a single application without having to use many investment applications via smartphones.

Now, do you already know when is the right time to switch Money Market Mutual Funds or other Mutual Funds instruments? For investment, you can rely on the digibank by DBS Application with DBS Treasures as your investment partner.

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