Types of Mutual Funds and Their Advantages and Disadvantages. Which One is selected?

In this article, we will discuss the types of Mutual Funds and their conditions. Why do we need to know these types so you can choose the type of mutual fund that suits your investment objectives and risk profile?

If so, what are the types of Mutual Funds?

Fundamentally, Mutual Funds are divided into four types, namely Money Market Mutual Funds, Bonds or Fixed Income Mutual Funds, Stock Mutual Funds and Mixed Mutual Funds.

Each of these types of Mutual Funds has provisions for asset placement that have been regulated in the POJK or Financial Services Authority regulations.

Money Market Mutual Funds

Have provisions for placing 100% of assets in money market instruments such as deposits and debt securities or bonds with maturities of under 1 year.

If you look at the graphs of money market mutual funds, their price movements tend to be stable and up. This is because the feeling that money market funds contain deposits or bonds with maturities of less than 1 year.

When we buy a deposit, the percentage of profit or interest is determined from the start, for example, you buy a deposit of 10,000,000 for 1 year with an interest of 3% per year. The value of your deposit will not decrease because the deposit cannot be traded and can only be disbursed when it is due

So this money market Mutual Fund is suitable for those of you who are beginners or have a conservative risk profile or don't like the decline in the portfolio

In addition, this Mutual Fund is suitable for those of you who want liquidity, for example to save some of your emergency funds, because the disbursement process is faster than other types of Mutual Funds. This mutual fund can also be used for short-term financial purposes of less than 1 year.

Bond mutual funds

Furthermore, there are bond mutual funds or fixed income mutual funds. As the name implies, this Mutual Fund is required to place at least 80% of its assets in debt securities or bonds.

In bond mutual funds, price movements have started to fluctuate, because bonds can be traded.

t is this demand and supply that makes bond prices fluctuate, but the fluctuations in bond Mutual Fund unit prices are still more stable than stock Mutual Funds.


Because when we buy bonds, it means we lend money to the party that issued the bonds, in return we will be given returns in the form of coupons every certain period, for example per month or per 6 months.

This coupon will provide consistent profits to bond mutual funds, so even though the price fluctuates, coupons can still help

So this bond Mutual Fund is suitable for those of you who have a conservative to moderate risk profile, namely investors who can accept ups and downs in investment values ​​but within certain limits

In terms of investment timeframe, bond mutual funds are usually used to optimize investment returns in the medium term, around 1 to 5 years

Stock Mutual Funds

whereas in mutual funds, a minimum of 80% of its assets must be placed in equity securities in the form of shares of public companies or public companies, both domestic and foreign.

If we look at the stock Mutual Funds chart, the ups and downs are very significant, because basically they are resistant to fish every exchange day where continuous demand and supply makes the price fluctuate very much, so for those of you who have an aggressive risk profile or are ready to face ups and downs in investment value Stock mutual funds can be an option

In addition, stock mutual funds are usually more suitable for long-term investments, for example more than 5 years

Mixed Mutual Funds

Apart from the three types of mutual funds, there are also mixed mutual funds that have their own uniqueness

This mutual fund has a maximum asset placement requirement of 79% for each type of asset, namely money market bonds and stocks

This gives flexibility for investment managers to determine the best amount of asset allocation in one mutual fund product. So, the point is flexible mixed mutual funds, for example the investment manager projects that the prospects for the stock market are not good, so the investment manager can allocate more funds to aspects of the money market and bonds.

 Whereas if we remember the previous explanation. Bond mutual funds are required to place a minimum of 80% of assets in bonds and stock mutual funds of at least 80% in stocks, so they don't smell like mixed mutual funds.

Mixed funds also go up and down because they are a mixture of the bond and stock money markets

In terms of risk profile, mixed mutual funds are suitable for investors with a moderate level of risk tolerance

These mutual funds are also usually used for medium to long term investment purposes

So, each type of Mutual Fund has a different level of potential profit and level of risk

Money market mutual funds are the lowest risk type of mutual funds while stock mutual funds are the highest risk type of mutual funds compared to other types of mutual funds.

In addition to the examples of the types of mutual funds that have been mentioned earlier, maybe you have also heard that there is such a thing as an index mutual fund.

What type of Mutual Fund is this Index Mutual Fund?

Index mutual funds are mutual funds that are designed to mimic the position and performance of a particular index. What is usually used is an index on bond and stock assets where there is a collection of bonds or stocks that have been selected according to the criteria for the index made

Therefore, we can conclude that index mutual funds are part of bond mutual funds and stock mutual funds

An example is the ABF Indonesia Bond index fund mutual fund product which is a bond index mutual fund and the BNI-AM IDX30 index mutual fund product which is a stock index mutual fund containing 30 stocks included in the IDX30 index.

of the various types of Mutual Funds, all of them also have sharia versions, for example Islamic money market mutual funds or Islamic stock mutual funds whose placement and management of investment funds are in accordance with sharia principles in the capital market

So, this mutual fund has a policy to invest in sharia instruments such as sharia deposits, sharia bonds or sharia bonds and shares.

So, from the explanation above, it can be concluded that there are 4 types of mutual funds, namely money market mutual funds, bond mutual funds, stock mutual funds and mixed mutual funds. Each of these types has different characteristics, so choose a mutual fund that suits your needs and risk profile.