All About US Dollar Mutual Funds

Hi, Moduers!

Don’t you know that you have the opportunity to invest in Mutual Funds with foreign currencies other than the Indonesian Rupiah? Curious, aren’t you? So, come on, let’s find out more in this article!

Moduers, we may be familiar with various types of Mutual Funds, such as money market funds, fixed-income funds, equity funds, and balanced funds. On top of that, Mutual Funds are also classified based on the type of its currency. Based on OJK’s (Financial Services Authority) regulations, the currencies allowed in Mutual Funds are Indonesian Rupiah (IDR), US Dollar (USD) and Euro. But, people are commonly investing in IDR and USD Mutual Funds.

The investment policy for IDR and USD Mutual Funds are the same. Both have to comply with the Mutual Funds Regulations in Collective Investment Contracts (KIK).

Below are some Differences between Investing in USD and IDR Mutual Funds

1. Variation of Investment Instruments

USD Mutual Funds use US Dollars which are recognised as worldwide currency so that Fund Managers can buy securities (stocks or bonds) from other countries. However, a maximum of 15% of the Mutual Fund’s total asset under management is allowed to be invested in foreign securities according to the OJK’s regulations. It is different from the Global Sharia Mutual Funds, which can support a minimum of 50% of the Mutual Fund’s total asset management in foreign securities.

2. Mutual Fund Net Asset Value (NAV)

In IDR Mutual Funds, the NAV started from IDR 1,000, while USD Mutual Funds started from $ 1. In addition, if the NAV of IDR Mutual Funds consists of 2 to 4 decimal places, the NAV of USD Mutual Funds use four decimal places.

Investing in USD Mutual Funds’ Risks

1. Currency Exchange Rate Risk

Although the Funds use USD as their currency, the investment portfolios can also be allocated to other investment instruments using other currencies. According to the prospectus, there is an exchange rate risk that can affect the performance of the Mutual Funds.

2. Transfer Fees

Moduers, when you invest in Mutual Funds and your bank account is different from the Custodian Bank account, you will get charged a transfer fee, won’t you?

Well, it also applies when you invest in USD Mutual Funds. There also will be some additional fees, such as commission fees for the sending bank, same-day fees (to ensure the money is received on the same day), correspondent bank fees, and total amount fees, so you can receive your money as much as written. But, you don’t need to worry, Moduers! Since in Moduit, the process of investing in USD Mutual Funds uses a local bank, namely BCA, as the escrow account when you subscribe and redeem your Mutual Funds, so you can minimise the costs.

The Advantages of Investing in US Dollar Mutual Funds

1. Diversify Your Portfolio

Moduers, in investing your money, there will be risks that You cannot avoid (systematic risk), and one of the systematic risks is country risk. This risk exists when a country is experiencing political conditions changes, presidential elections, and even wars that can give sentiment to the capital market. Although You cannot avoid this risk, you still can minimise it by diversifying your investment portfolio into foreign currency (USD) mutual funds.

2. Suitable for Achieving Your Financial Goals Abroad

If you plan to enrol for study or living abroad, you can consider investing in USD Mutual Funds to reduce the risk of foreign currencies changes in the future.

How was it, Moduers? Are you interested in investing in USD Mutual Funds? If you are, I hope this article is helpful for you!

Salam Moduit!