What Mutual Fund Terms Should You Know Before Investing?
The key mutual fund terms to know are NAB/UP, participation units, AUM, fund risk, Investment Manager, Custodian Bank, Receiving Bank, redemption fee and 1-month return, all of which you will come across when you invest in mutual funds on Pluang. Participation units are your units of ownership in a fund, NAB/UP is the price of one unit, and AUM is the total value of the money the Investment Manager manages for that fund. Fund risk is the fund's risk level, based on the type and allocation of its investments. The Investment Manager manages the fund's portfolio, while the Custodian Bank, approved by OJK, stores the fund's money and securities on investors' behalf. The Receiving Bank is the bank used to send sale proceeds to your account, the redemption fee (sell fee) is the fee for selling units, and the 1-month return shows the fund's performance over the last month. Each fund's Prospectus and Fund Fact Sheet explain these details for that specific fund.
| Term | Meaning |
|---|---|
| NAB/UP (NAV) | Net Asset Value per Participation Unit, the price of one unit of the fund. It equals the fund's total net assets divided by the number of units in circulation, and is updated at the end of each exchange trading day. |
| Participation unit (unit penyertaan) | Your unit of ownership in a mutual fund. The units you get from a purchase equal the amount invested divided by the final NAB/UP. |
| AUM (Asset Under Management) | The total value of the funds managed by the Investment Manager for the mutual fund. |
| Fund risk | The fund's risk level, based on the type and allocation of the mutual fund's investments. |
| Investment Manager | A party whose business is managing a securities portfolio for customers, or managing a collective investment portfolio for a group of customers. This excludes insurance companies, pension funds and banks that carry out their own business activities under the applicable laws and regulations. |
| Custodian Bank | A bank selected by the Investment Manager and approved by OJK to represent investors in storing the investment funds and securities held by the mutual fund. It also carries out administrative work for investors, such as ensuring that asset prices reported to investors use fair value. |
| Receiving Bank (Bank Penampung) | The bank used to send your mutual fund sale proceeds to your account. |
| Redemption fee (sell fee) | The fee for selling mutual fund units. |
| 1-Month Return | The return calculated from the fund's performance over the last month. |
| Prospectus | A document describing a fund's investment objectives and strategy, with key points on management performance and financial information. |
| Fund Fact Sheet | A document with a fund overview, the fund's historical performance and its asset allocation. |
| Cut-off time | 13:00 WIB on Pluang. Transactions before the cut-off get that trading day's NAB; transactions after it get the next trading day's NAB. |
| Subscription and redemption | Subscription means buying mutual fund units; redemption means selling them. |
| Switching | Moving your investment from one mutual fund to another fund managed by the same Investment Manager. |
Related questions:
Q: What is a participation unit in a mutual fund?
A participation unit (unit penyertaan) is your unit of ownership in a mutual fund, and its price is the NAB/UP. The units you get from a purchase equal the amount invested divided by the final NAB/UP: for example, Rp1,000,000 invested at a NAB of Rp1,250 gives 800 units. Your final units are known once your transaction is verified, because the NAB is only published at the end of the exchange day, between 21:00 and 24:00 WIB.
Q: What do subscription and redemption mean in mutual funds?
Subscription means buying mutual fund units, and redemption means selling them. Both follow the 13:00 WIB cut-off on Pluang: a transaction completed before 13:00 WIB on an exchange trading day gets that day's NAB, which is updated between 21:00 and 24:00 WIB, while a transaction after 13:00 WIB, or on a weekend or exchange holiday, gets the next trading day's NAB. Redemption proceeds are sent through the Receiving Bank to the bank account you registered as your mutual fund bank, which must be in your own name (guide: "Menambahkan Bank untuk Pencairan Reksa Dana"), within a maximum of 7 business days under OJK regulations.
Q: What is the difference between an Investment Manager and a Custodian Bank?
The Investment Manager decides how the fund's money is invested and manages its portfolio. The Custodian Bank, selected by the Investment Manager and approved by OJK, stores the fund's money and securities on investors' behalf and does the administrative work, such as ensuring asset prices reported to investors use fair value. On Pluang, each fund's assets are held by a licensed custodian bank supervised by OJK.
Q: What does a fund's 1-month return tell me?
It shows how the fund performed over the last month only. A single month says little about the long term, and past performance does not guarantee future returns. For a fuller picture, check the fund's historical performance in its Fund Fact Sheet and compare its return with a suitable benchmark, such as bank deposit interest for a money market fund.
Q: Where can I read how these mutual fund terms apply to a specific fund?
In the fund's Prospectus and Fund Fact Sheet. Open the fund's asset page in the Pluang app, scroll to the bottom, and tap "Prospectus" to go to the fund's prospectus page. The Prospectus explains the fund's objectives, strategy and financial information, while the Fund Fact Sheet summarises its overview, historical performance and asset allocation.