ORI025 Profits Up to 6.4% But This Instrument Can Get 8%, Which One to Choose? My Money – 18 hours ago

Jakarta, CNBC Indonesia – As known, The Indonesian government opened the offering period for Retail Government Bonds (ORI) series ORI025 yesterday. ORI025 is marketed with two investment tenor options, namely three and six years.

For a three-year tenor, the ORI025-T3 coupon yield is 6.25%. Meanwhile for six years, ORI025-T6 can be up to 6.4%.

However, when you look at the performance of fixed income mutual funds, you may be tempted because the instrument's performance can reach 8% or even reach double digits in a year. The following is a list of fixed income mutual funds that had the highest performance in a year.

Does this mean fixed income mutual funds are better to choose? The following is the explanation.

Direct bonds vs fixed income mutual funds

Investing in government debt securities directly or in the mutual fund version both have advantages and disadvantages. Although quite a few experts say that the results obtained will not be much different.

However, it is worth paying closer attention to the fact that government debt securities are fixed income instruments. Meanwhile, mutual funds gain profits from capital gains growth in net asset value per investment unit, although some also promise dividends.

Government bonds have a maturity period, and when they reach that period, our investment ends. This is different with mutual funds which have no maturity period.

If a bond in the mutual fund portfolio matures, the investment manager will replace it with a new debt security.

Besides that, the risks are different. ORI025, which is a government securities, is an instrument that is free from the risk of default because the capital and profits are guaranteed by law. Meanwhile mutual fund profits cannot be guaranteed.

If you buy mutual funds, your investments are automatically diversified

If you buy fixed income mutual funds, you are investing in various types of debt securities. It's different from buying a government bond directly.

The returns and risks of mutual funds will adjust to the price of the debt securities on the secondary market. When the price falls, the NAV value of the mutual fund will also fall. Vice versa.

The value of government debt securities also fluctuates, but if we sell them on the secondary market, we will not experience the risk of capital loss.

[Gambas:Video CNBC]

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