What Is a USD Money Market Mutual Fund? How It Works and Its Benefits

Holding funds in US dollars is not limited to foreign currency savings accounts or time deposits. Investors may also consider USD-denominated mutual funds as an alternative for managing funds in US dollars.

What Is a USD Money Market Mutual Fund?

A USD Money Market Mutual Fund is a mutual fund that invests 100% of its portfolio in money market instruments and uses the US dollar as its denomination currency.

This means that investment transactions, Net Asset Value (NAV), and redemption proceeds are denominated in USD.

Investors’ funds are professionally managed by an Investment Manager and allocated to instruments in accordance with the fund’s investment policy, such as USD time deposits, money market instruments, government securities, and/or USD-denominated corporate bonds with maturities of less than one year.

How Does a USD Mutual Fund Work?

USD mutual funds generally work in the same way as Rupiah-denominated mutual funds. Investors purchase participation units based on the applicable NAV per unit, while the funds are collectively managed by the Investment Manager.

The investment value may increase or decrease in line with changes in the NAV. When investors redeem their investment, the proceeds are calculated based on the number of units held and the applicable NAV.

USD mutual fund subscriptions may be made using a USD account or a Rupiah account, with the funds converted by the bank based on the prevailing exchange rate.

Benefits of USD Money Market Mutual Funds

USD Money Market Mutual Funds may offer several benefits:

1. Helps Manage Funds in USD

This product may be suitable for investors or companies that receive income, maintain cash balances, or have transaction needs in US dollars.

2. An Alternative to USD Current Accounts and Time Deposits

Idle USD funds may be managed through a portfolio of instruments selected and monitored by a professional Investment Manager.

However, mutual funds are not bank deposit products, and their investment value may fluctuate.

3. Supports Currency Diversification

USD mutual funds may help diversify portfolios that are predominantly invested in Rupiah-denominated assets.

4. Professionally Managed

Investors do not need to select and monitor individual USD instruments directly, as the portfolio is managed by a professional Investment Manager.

Risks to Consider

USD Money Market Mutual Funds are still subject to investment risks, including NAV fluctuations, credit risk, liquidity risk, interest rate risk, and foreign exchange risk.

Foreign exchange risk is particularly relevant for investors who subscribe using Rupiah or evaluate their investment value in Rupiah terms.

Therefore, investors should understand the product characteristics, investment policy, fees, and transaction mechanisms before investing.

Accessing USD Money Market Mutual Funds for Corporate Clients

Companies looking to manage funds in US dollars can access USD Money Market Mutual Funds through FUND Corporate by Mirae Asset (click here).

The platform enables corporate clients to access curated mutual fund products, conduct transactions online, monitor their portfolios, and manage transaction approval processes based on the authority assigned to company representatives.

With this access, companies have an additional alternative for managing USD-denominated funds according to their liquidity requirements, investment horizon, and internal investment policies.

Frequently Asked Questions

Are There Any Redemption Fees for USD Mutual Funds?

Mirae Asset does not charge redemption fees. However, transfer fees from the Custodian Bank may apply:

No transfer fee if the client’s receiving account is held with the same bank as the mutual fund’s collection account, which is Bank DBS.

Transfer fees starting from USD15 may apply if the client’s receiving account is held with a different bank from the mutual fund’s collection account, which is Bank DBS.

Can USD Mutual Funds Be Purchased Using IDR?

Yes. Mutual fund subscriptions may be made through a foreign currency transfer or forex transfer via internet banking, or through a bank teller.

Read the complete FAQ by clicking here.

Conclusion

USD mutual funds are investment products denominated in US dollars. They may be considered by both individual and corporate investors looking to manage USD-denominated funds while adding currency diversification to their portfolios.

Before investing, investors should understand the potential returns, risks, fees, and transaction terms applicable to each product.

Disclaimer: Mutual funds are capital market products and are not bank deposit products. Investment values may increase or decrease. Past performance does not guarantee future performance. Investors are required to read the prospectus and fund fact sheet before investing.