It is said that investment trusts are for beginners, but why do investment trusts lose money?

    Hello and welcome to the article "Talking about money". Mutual funds are often used as a recommended investment vehicle for beginners. The reason is simple. what are we doing Let's keep quiet and wait for victory. Given that mutual funds come with their own set of risks, that's a false assumption. This erroneous assumption has surprised many novices as the mutual funds they purchased turned out to be loss-making.

It is said that investment trusts are for beginners, but why do investment trusts lose money?

    They thought that if their money was managed by an investment manager, they would definitely make a profit even if it wasn't.Remember that every investment vehicle has its own risks. . This article discusses the risks involved in investing in mutual funds.

    We hope that this article will be helpful for those who are considering investing in mutual funds. The first risk is capital loss or loss in simple terms. In other words, if the mutual fund nabs/shares or price/shares would be gained if losses were reduced, we would only realize it if we sold and lost. The mutual fund we have, some of you may think that mutual funds are managed by professionals.

    Are you going to lose? Money market funds and fixed income securities are relatively less risky. However, mixed mutual funds and stock mutual funds contain stocks in both mutual funds' portfolios, and as prices are generally volatile and the price per unit may fall, risks are high. It can be said that it is expensive. Stocks and other investment vehicles in mutual fund portfolios rose 10% after falling prices, but think high risk and high return.

    On the other hand, equities and mixed mutual funds can also offer high returns, and we can see how equity funds will perform in 2020, for example. As you know, JCI experienced a steep decline throughout his 2020. Equities are clear and Equity Mutual his fund also sees a sharp decline in earnings/units. Now let's take a look at the stock mutual funds available on Bareksa.

    2020 will see another example of equity funds falling -65% over the past year. Let's say you bought about $10 million worth of mutual fund products last year. This year's mutual fund funding is just 3.5 million IDR. Wow, how come it's so deep?

    Why? The main reason for this is to allocate the funds managed by these mutual funds to volatile stocks that can be considered very risky. Based on available shareholding information, there are no blue chip stocks or stocks with strong operating bases in the top 10 mutual fund portfolios. Mutual fund portfolios are full of stocks in companies with poor financial foundations, falling below the Rp 50 floor, and even stock market halts.

    Mutual Funds I actually hope we can learn from these two examples. It's not enough to just buy a mutual fund and close your eyes while waiting for profits. We should always research the details about the investment portfolio of any mutual fund we buy and tailor it to his risk profile. Remember, high risk - high reward, low risk - low reward. Choose a mutual fund with a low-risk investment portfolio if you are not prepared to incur potentially large losses. We now turn to the second risk, namely mutual fund products or investment managers having problems with the mutual fund or associated investment manager. Reserves from OJK, defaults, etc. Then what do you do if the investment manager or mutual fund has a problem? If the investment manager is in trouble, this could be due to a warning or revocation of a license to operate.

    Regarding investment trusts with problems, the Financial Services Agency may suspend trading or temporarily suspend trading of investment trusts, but if the problem is serious, the investment trust will be dissolved by the Financial Services Agency. There are cases. At the end of 2019, there was a very worrying case when OJK decided to liquidate his six mutual fund products in Minna Padi Asset Management.

    The reason for the dissolution is that these mutual funds promise a certain return, so when you buy a mutual fund you are promised to receive a certain percentage of return within a certain period of time. Surely you can't promise a certain rate of return? No way. According to OJK regulations, only protected mutual funds are allowed to promise guaranteed returns, while Minapadi mutual fund products promise guaranteed returns or returns after a resolution is determined. It's an equity fund that can't. However, Minna Padi's investment fund portfolio includes stocks with low trading volume, so it is not so easy to actually fund clients. Third, mutual funds are not guaranteed by her LPS.

    You should know that up to $2 billion of deposit and savings investment vehicles are insured by LPS. So, in the event of a problem with the bank in question, you can file a deposit insurance claim with LPS. Guaranteed by LPS, LPS is not guaranteed, so mutual fund risk is probably greater compared to deposits, but even if not guaranteed by LPS, mutual funds continue to be under the supervision of OJK. So if a mutual fund or investment manager has a problem with his OJK, they step in.

    Now that you understand the risks involved in investing in mutual funds, you may be wondering what you need to do to mitigate those risks. There are many things you can do to minimize this risk. The first is to review and evaluate the composition of mutual fund portfolios. Therefore, each mutual fund product has a different investment portfolio.

    For example, in the context of equity funds, some managed funds are associated with equity. Blue chip stocks, or stocks of large companies, already have a strong operating base. These blue-chip stocks are often seen as fairly safe and fairly stable in price because the fundamentals of the business are already strong, but there are also mutual funds that invest their mutual funds in equities. Small companies without a strong business foundation, usually companies like Samsang like this one, are highly risky due to high price volatility.

    The composition of this mutual fund investment portfolio is described in the fund data sheet for each mutual fund product. Evaluate the investment portfolio of mutual funds you have. Historical mutual fund returns are not representative of future mutual fund returns.

    Therefore, you should regularly evaluate the investment portfolio of the second mutual fund you have and check the reputation and competence of the investment manager so that you can compare it to buying that mutual fund. Your fund adjusts fixed assets.

    Of course, you can't pick people at random. Need to know who is in control of your money? What about your reputation? What is your appearance history? All this information can be found in the YBS Mutual Fund's prospectus. In addition to the investment manager's reputation and capabilities, the funds managed by the relevant investment manager can also be considered.

    If we invest our money in a mutual fund owned by an investment manager whose assets may not be very large, the investment manager will be in financial trouble if the client decides to withdraw the third largest amount of money. fall into. The majority of mutual funds also divide their assets in other ways to diversify their assets. Not all money can be invested in a mutual fund just because it is managed by an investment manager. Therefore, we minimize risk through asset diversification.

    Much of their money went into mutual funds, and they even ended up losing money. There is no such thing. That's all I want to say. There is no end to talking about money, so come back to the next article. 

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