Get to Know the Terms of Sharia Mutual Funds that Novice Investors Must Know

In investing, potential investors can choose a variety of instruments that can be adjusted to their profile, and one of the instruments that can be looked at is mutual funds. Mutual funds are investment instruments that can be recommended for novice investors because of their management carried out by investment managers. 

By investing using mutual funds, potential investors do not need to struggle with various financial instruments such as deposits, bonds, stocks, and so on.

Mutual funds can also be an alternative for veteran investors who want to diversify in their investment portfolios. Investors who invest with mutual funds will get a summary of investment performance that is usually issued monthly by the fund manager in an easily digestible form. That way, mutual fund investors can easily find out how strong their investment performance is.

Investors can also choose mutual funds such as conventional mutual funds and Islamic mutual funds. The difference between the two is basically from the management. For Islamic mutual funds, the basic definition is that the funds managed will be aimed at a portfolio that is carried out in accordance with sharia principles. 

If investors are interested in learning more about the terms in Islamic mutual funds before starting to invest in this instrument, it is recommended to know the terms used. This article will discuss several terms in Islamic mutual funds.

Terms in Sharia Mutual Funds

In Islamic mutual funds, there are several terms related to the Islamic economy. In order for investors to better understand Islamic mutual funds, it is important to recognize the applicable terms. Some of them are as follows

1. The Sharia Supervisory Board (DPS)

of DPS has the authority to maintain the management of funds in Islamic mutual funds in accordance with sharia principles. In addition, DPS also has expertise in sharia law and capital markets which is very important to provide recommendations for the distribution of cleansing funds.

2. Cleansing

In the cleansing process, DPS will clean sharia mutual funds from sources of income that are not in accordance with halal status and sharia principles during the course of investment.

3. The Sharia Securities List (DES)

DES is a guideline for investment managers in the process of managing Islamic mutual funds issued by the Financial Services Authority (OJK) twice a year. DES records which companies have issued securities in accordance with sharia principles.

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4. Akad Wakalah bil Ujrah

Akad is a process when the muwakkil or the giver of power of attorney will give wakalah or power to the other party to carry out actions in accordance with the power given. As compensation, the beneficiary or representative will get a ujrah or reward. In other words, this contract is the process of authorizing investors to fund managers to manage Islamic mutual funds based on sharia principles.

5. Akad Mudharabah

This contract is a process in which a party will hand over the funds it has to another party with the intention of being managed. The profits and losses resulting from this management activity will be shared between the fund owner and the manager in accordance with the agreement between the two parties.

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6. Shabib Al-mal/Rabb Al-mal

This term is a term for fund owners who will be invested through a sharia securities portfolio by an investment manager managing a Sharia mutual fund. So it can be said that this term is a term for investors in Islamic mutual funds.

7. The CIC Collective Investment Contract (CIC)

is a cooperation contract for fund management powers in investment managers who cooperate with the Custodian Bank by shabib al-mal / rabb al-mal.

Sharia mutual funds can be an alternative for potential investors who want their funds to be managed based on sharia principles. In addition, Islamic mutual funds can add to the diversification of investment portfolios owned by investors. 

Mutual funds are perfect for investors who do not have free time to check their investment performance. Risk management will also be carried out by fund managers who already have qualified flying hours, which will reduce the risks that may occur to investors who do not have enough experience in investing.

Given the large Muslim population in Indonesia, Sharia mutual fund investment may develop into a favorite alternative. But of course, it is possible for investors who come from various different backgrounds to include their funds in Islamic mutual funds.

Mutual funds can be purchased through companies that house investment managers or can also be done through banks that have credentials as Mutual Fund Selling Agents or APERDs. Mandiri Sekuritas as a trusted securities company in Indonesia can provide information about various investment instruments and education so that investors can easily understand how the funds they invest can provide benefits along with the risks. 

Investors can also use the MOST app to view the performance of their preferred investment instruments to see the performance of their portfolio in the future. Visit MOST immediately and make your investment together with Mandiri Sekuritas.

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