Before starting your investment journey, it’s important to understand your investment goals first. Generally, these goals can be categorized into liquidity, income, and growth. To explore these categories in detail, click the button below!
Once you’ve identified your investment goals, let’s dive into an investment instrument aimed at achieving liquidity, namely Money Market Mutual Funds (MMFs). Check out the explanation below!
What is a Money Market Mutual Fund (MMF)?
A Money Market Mutual Fund is a type of mutual fund that exclusively invests in 100% money market instruments (short-term). Due to its structure, MMFs are suitable for investors across risk profiles, from very conservative to aggressive, who are looking to achieve liquidity-based investment objectives.
When you invest in an MMF, professional Investment Managers will allocate funds across various money market instruments, such as deposits and debt securities (bonds) with maturities of less than one year.
Types of Money Market Instruments
Here are some common products included in money market instruments, along with brief explanations:
- Deposits: A type of bank deposit that can only be withdrawn after a specific period, under agreed conditions. Deposit terms typically range from 1, 3, 6, to 12 months.
- Bank Indonesia Certificates (SBIs): Debt securities issued by Bank Indonesia with a maturity of 1 to 3 months. SBIs operate on a discount system, with returns offered in the form of interest.
- Government Securities (SBNs) – Tenor < 1 year: Short-term debt securities issued by the Indonesian government to finance the national budget. These include: State Sharia Securities (SBSNs), adhering to sharia principles and Government Bonds (SUNs), issued under conventional principles.
- Corporate Bonds – Tenor < 1 year: Bonds issued by private companies or state-owned enterprises, typically to finance short-term or seasonal needs.
- Bank Indonesia Rupiah Securities (SRBIs): Short-term rupiah-denominated securities issued by Bank Indonesia, backed by underlying assets such as Bank Indonesia SBNs.
Benefits and Risks of Money Market Mutual Funds
After learning more about money market funds, here are the benefits and risks to consider before choosing to invest in money market funds.
To learn more about other mutual fund products, along with their benefits and risks, click here!
So, what are you waiting for? Let's start investing in Money Market Mutual Funds through the Welma feature in myBCA now.