Public awareness regarding the importance of investing is steadily rising. This is supported by the availability of a wide range of investment instruments, such as stocks, bonds, gold, real estate, and even digital assets like cryptocurrencies.

This diversity of options enables individuals to choose investment types that align with their specific financial goals.

Among these choices, mutual funds have become one of the more favored investment vehicles.

In simple terms, a mutual fund is a platform that pools money from many investors. The collected funds are then managed by professional fund managers and invested into a portfolio of securities—such as stocks, bonds, or money market instruments—under the supervision of a custodian bank.

Mutual funds can be likened to a vehicle that helps investors reach their financial destinations. The type of "vehicle" chosen can match the investor’s risk appetite and investment style—ranging from slow, low-risk options to fast-paced, high-risk alternatives.

Five Advantages of Mutual Funds

Dimas Ardhinugraha, Investment Specialist at PT Manulife Aset Manajemen Indonesia (MAMI), outlined five key benefits that mutual fund investors typically enjoy:

1. Convenient diversification

Experienced investors may find it easier to build a diversified portfolio. However, for beginners who may lack information or time for in-depth research, mutual funds offer instant access to a professionally curated basket of assets.

“These assets can span various sectors, geographic regions, and asset classes. Such a level of diversification—especially in actively managed mutual funds—is hard to replicate without significant capital and time,” Dimas explained, as quoted on Sunday, June 29, 2025.

Diversification is crucial for maintaining and growing wealth. A well-diversified portfolio tends to be more resilient and stable, helping investors meet their financial objectives at different life stages.

2. Professional management with strategic agility

Investment management firms employ expert teams dedicated to essential investment functions—ranging from market research, asset allocation, executing trades, to record-keeping and more.

As a result, mutual fund investors can leave the day-to-day management to professionals, freeing up their own time for other pursuits.

3. Cost efficiency

Dimas noted that a well-structured portfolio requires regular adjustments, such as rebalancing between equities and bonds. This process often involves numerous transactions and associated costs.

In mutual funds, transactions are conducted collectively on behalf of all unit holders, making the process more cost-effective and reflected in the unit price.

“Moreover, the returns earned from mutual funds are not subject to taxation, which simplifies annual tax reporting for investors. Some investment platforms—like Manulife iFUNDS—also waive fees for buying or selling mutual fund units,” he added.

4. Better control over behavioral risks

Even seasoned investors are not immune to cognitive biases—such as fear of loss, information overload, or impulsive decision-making.

Mutual funds follow structured and data-driven investment processes for portfolio construction and trading decisions, which helps minimize emotional influences and maintains balanced risk-return outcomes.

5. Access to niche markets

Certain mutual fund products allow investors to tap into specific sectors or regions that are otherwise difficult for individual investors to reach—such as emerging markets, ESG-focused funds, or corporate bonds.

Mutual Funds as a Reliable Investment Partner

Dimas emphasized that mutual funds can serve as a strategic and accessible investment choice. They offer a balanced mix of diversification, professional insights, and operational efficiency.

“In an investment landscape where time, focus, and risk management are key, mutual funds continue to be a strong and dependable partner,” he stated.

He also advised that investors should fully understand how the investment vehicle they choose works—including how to buy, sell, and how it generates returns.

According to Dimas, investors must not be lured solely by the promise of high returns without clearly and rationally understanding the mechanics behind them.