A.

INVEST INDIRECTLY
1. Definition
Indirect Investment, which means that investors can invest but are not directly
involved and simply by holding it in the form of stocks and bonds. Indirect investment is
generally a short-term investment that includes transaction activities on the capital
market and on the money market. This investment is referred to as a short-term
investment because in general it sells shares and / or currencies in a relatively short period
of time, depending on the fluctuation in the value of the shares and / or the currency to
be traded. Law Number 25 of 2007 concerning Investment has actually distinguished
explicitly between direct investment (direct investment) and indirect investment (indirect
investment). This can be seen in the explanation of Article 2 of the law, which says:
"What is meant by investment in all sectors in the territory of the Republic of Indonesia
is direct investment and does not include indirect investment." This investment manager
is an investment manager, investors only act as shareholders and do not need to be
physically present to control the daily activities of investment management.
Usually people who want to invest indirectly take advantage of the services of an
investment manager by using mutual fund products. Through mutual funds, investors
gather in one place with the intention of collecting investment funds in a securities
portfolio which will then be managed and entrusted by the investment manager.
Investment managers who are entrusted with managing investment funds will still need
access to the stock exchange by becoming Broker-Dealer clients for buying and selling
shares. Investors who choose indirect investments usually tend to choose investments in
a short time or short term investments. Profits also come from dividends and capital
growth from the stocks or bonds invested. Then, when stocks or bonds suffer a loss.

2. Advantages and Disadvantages of Indirect Investment

a. Advantages :
1) Its activities have been regulated by investment managers who are experts in
managing investment funds. Investors only need to provide investment funds and
entrust it to the investment manager to manage these funds without the hassle of
managing and managing the shares invested.
2) It is easy to cash out, therefore people who need short term investments will prefer
this.
b. Disadvantage:
1) Shareholders do not have full control over the management of funds and activities
of the company they are investing in.
2) If there is a loss related to the managerial negligence of the company receiving
investment funds, the investor can only bear the risk without being able to file a
lawsuit against the company concerned.

B. INVESTMENT COMPANIES
1. Definition
Investment company is a non-bank financial institution that is engaged in buying
and selling securities. Put simply, a company that pooles investor resources to reinvest
 in marketable securities ranging from stocks to debt securities to money market
instruments is called an investment company.
Investment companies hold securities from other companies only to make
investments. The fund manager decides the type of security in which the combined
money will be invested in order to have a diversified and managed portfolio.

2. Types of insurance companies

Insurance companies are classified into 3 categories
a. Open-End Management Investment Companies also referred to as Mutual Funds, have
no limit on the number of issue fund units which means, investors can continue to buy
or redeem their shares at net present asset value (NAV). Open-end mutual funds are
more convenient for investors because they allow them to buy as many shares as they
want and can easily redeem them however they want.
b. Closed Management Investment Companies also known as Investment Trusts, issue a
number of fixed shares through an initial public offering. It is basically a public
company which increases the amount of fixed capital by issuing a number of shares
which are traded on the stock exchange. Here, the stocks are limited and hence the
investors cannot buy as many shares as they want nor can they sell their existing shares
before the end of the scheme. However, if there is an investor who wants to sell his
shares, the same is traded on the stock exchange.
c. Unit Investment Trusts also referred to as Unit Trusts share in common both closed
end and open end mutual funds. Here too, the investment company holds a portfolio
of stocks, stocks, bonds and other money market instruments purely for investment
purposes. Like, open end funds, most of these can be bought and sold directly from
the issuing investment company while in some cases these are also traded on the
secondary market. Unit trusts often have low minimum investment requirements and
shares can be bought and sold whenever an investor wants.
Company investation provides an advantage to small investors for investing in a
variety of securities that would otherwise not be possible.

3. Examples of investment companies in Indonesia

Some examples of investment companies registered with Bank Indonesia
a. ABM Investama Tbk
b. Alakasa Industrindo Tbk
c. PACIFIC STRATEGIC FINANCIAL Tbk
d. Arthavest Tbk
e. PT MNC Investama Tbk.
f. Global Mediacom Tbk
g. Cita Mineral Investindo Tbk
h. Equity Development Investment Tbk
i. Leo Investments Tbk
C. TYPES OF MUTUAL FUNDS
According to Darmadji and Fakhruddin "2001:149" mutual funds are divided into
several types based on form, nature, investment portfolio and investment objectives.
1. By Shape
Mutual funds based on their form are divided into two types:
a. Mutual Fund in the form of a Company "Corporate Type"Mutual fund issuing
company raises funds by selling shares and subsequently the funds from the sale are
invested in various types of securities traded in the capital market and money market.
b. Mutual Fund in the form of Collective Investment Contractual "Contractual Type" is
a contract between the Investment Manager and the Custodian Bank that binds the
unit holder, where the Investment Manager is authorized to manage the collective
investment portfolio and the Custo Bank is authorized to carry out the collective
depository. This form is more popular and the number is growing compared to mutual
funds in the form of the Company.

2. By Its Nature
Mutual funds by their nature are divided into two types:
a. Closed-End Fund That cannot buy back shares that have been sold to investors. This
means that shareholders cannot resell their shares or participation units to the
Investment Manager. If the shareholder wants to sell his shares, it must be done
through the Stock Exchange.
b. Open-End Fund That offers and buys back its shares from investors to a certain
amount of capital that has been issued. Shareholders of this type may resell their shares
or participation units to the Investment Manager through the Custodian Bank and the
Custodian Bank shall purchase them in accordance with the NAB unit at the time.

3. By Investment Portfolio
Mutual funds based on their investment portfolio are divided into four types:
a. Money Market Funds This type of mutual fund only invests in debt securities with
maturities of less than one year. The goal is to maintain liquidity and maintenance of
capital.
b. Fixed Income Funds This type of mutual fund invests at least 80% of its assets in the
form of debt securities. These mutual funds have relatively large risks from money
market mutual funds. The goal is to produce a stable rate of return.
c. Equity Funds This type of mutual fund invests at least 80% of its assets in the form of
equity securities. Because the investment is made in stocks, the risk is higher than the
previous two types of mutual funds but produces a high rate of return.
d. Discretionary Funds This type of mutual fund invests in equity securities and debt
securities.

4. Mutual Funds Based on Investment Objectives

Mutual funds based on their investment objectives are divided into three types:
a. Growth Fund is a mutual fund that emphasizes on pursuing the growth of the value of
funds and allocating funds to stocks.
 b. Income Fund is a mutual fund that prioritizes constant income, this type of mutual
fund allocates its funds to bonds or bonds.
c. Safety Fund is a mutual fund that prioritizes rather than growth and allocates its funds
in the money market, such as time deposits, certificates of deposits and short-term
bonds.

D. INDIRECT INVESTMENT MECHANISM

There are two types of investments. The first isDirect Investmentwhere investors can
directly invest by buying directly a financial asset from a company. This investment is real
assets thatinvolvetangibleassets, such as the purchase of productive assets, the establishment
of factories, the opening of mining, the opening of plantations, and others. Direct investment
is always associated with direct involvement of capital owners in capital management
activities. In direct investment, investors are directly involved in business management
activities and are directly responsible in the event of a loss.
The second is Indirect Investment(Portfolio Investment)where investors can make
investments but not directly involved and simply by holding them in the form of stocks and
bonds. Indirect investments are generally short-term investments that include transaction
activities in the capital market and in the money market. These investments are referred to
as short-term investments because they generally sell stocks and/or currencies for a
relatively short period of time, depending on fluctuations in the value of stocks and/or
currencies they want to sell. Law No. 25 of 2007 on Investment has actually distinguished
firmly between direct investment and indirect investment (portfolio investment). This can
be seen in the explanation of Article 2 of the law, which says: "what is meant by investment
in all sectors in the territory of the Republic of Indonesia is direct investment and does not
include indirect investments or portfolios."
Direct Investment Portfolio Investment
Investors must be present in conducting Investors are sufficient as shareholders and do
business not need to be physically present

___ The goal is to get maximum profit in a short

period of time

Investors have control over the Investors have no control over everyday
company's daily activities companies

___ Investors are at their own risk and cannot sue

companies that carry out their activities

___ Losses on Portfolio Investments are not

covered by International Customs Law

Establishing a Company Not Setting Up a Company

The Company is controlled by all/ part of There is a separation of owner and

the owner of the company management
 Investments cannot be moved at any Investments can be moved at any time
time

The legal basis of Law No. 25 of 2007 The legal basis of Law No. 8 of 1995 on
on Investment Capital Market

The manager is BKPM The managers are Bapepam and LK

E. INVESTMENT COMPANY PERFORMANCE

Investment company is a financial company that organizes investment interests in
securities, which refers to a specific object. The investment company also acts as a channel
for the distribution of interest dividends, and realizes profits, in addition to the distribution
can choose not to pay taxes to the government, and can also offer professional management.
Investment performance is currently showing a fairly solid positive trend , even when
the global economy is experiencing a slowdown. Investment has transformed into one of the
main components that support economic growth, replacing export performance which tends
to slow down. Investments can also be referred to as financial portfolios.
Economic investment in the economic sector has a meaning; an investment with a
certain amount to finance the business process with a profit sharing in accordance with the
agreement. But as the times go on like now, there are many types of investments that we
can do with capital that is not too big. Investments can be made individually or individually
with a variety of investment objectives that are around us.

1. Investment Center
The investment center is a responsibility center in an organization to assess the
performance of its managers based on the profits earned and associated with investment
funds. Each investment center has a main manager and is responsible for every unit of
activity or program that occurs in all divisions he leads. Then periodically the manager
will account for the results of his work to the leader of the company. Central managers
can assess the achievements of individual managers. Based on the information and
analysis model used, the manager tries to find answers if the results achieved are not in
accordance with what was planned before. In general, this is done with a performance
measurement model.

2. Calculating Investment Performance

In the course of investment, the value of an asset can change from time to time due
to changing market conditions. In addition, as part of the investment process, investors
need to monitor and evaluate the performance of their portfolio investments to see to
what extent the strategies they have chosen work to achieve their investment goals.
Basically, there are three main reasons why we need to measure investment
performance:
a. Investment performance is the goal of the investment process.
By measuring investment performance, investors can measure how much their
investment goals have achieved.
 b. As feedback on the achievement of investment goals.
Performance measurement allows investors to conduct evaluations, where the
results of the evaluation can be used as feedback on the achievement of investment
objectives. Armed with this feedback, investors can determine whether the strategy
they have chosen is correct, or whether they still need to take adjustments to achieve
their investment goals.
c. Avoid deviations from investment objectives.
Periodic evaluation of investment performance can help avoid mistakes that result
in deviating investment returns from investment objectives. If mistakes do occur,
investors can immediately correct them by changing their investment strategy or by
refining their investment process.

3. Factors in calculating performance

There are several factors that need to be considered by investors in calculating
investment performance:
a. Type of investment portfolio
b. Investment guidelines and limits
c. Benchmarks
d. Time period and measurement interval
e. Cash inflow / outflow during the measurement period
f. External factors, such as taxation, foreign exchange rates, government regulations,
and so on
The choice of benchmarks is important because investors need to compare the
performance of their portfolio with the performance of the benchmark. The benchmarks
chosen should be adjusted to the portfolio asset class so that the comparison is equal
(apple-to-apple comparison). For example, a stock portfolio with an investment limit of
80-100% in stocks and 0-20% in money market instruments usually uses the Composite
Stock Price Index (IHSG) as its benchmark.
A bond portfolio with an investment limit of 80-100% in government bonds and 0-
20% in money market instruments usually uses the HSBC Bond Index as the benchmark,
while for money market portfolios, the average deposit interest rate or Bank Indonesia
Certificate (SBI) can be used as a benchmark. benchmarks. For a mixed portfolio, the
benchmarks can be a composite of several indexes or variables. For example, for a mixed
portfolio with investment limits of 0-20% in money market instruments, 40-60% in
government bonds and 40-60% in stocks, the benchmark is a composite 50% JCI + 50%
HSBC Bond Index.

4. Performance calculation method

In choosing a method of calculating the performance of investors, it is necessary to
understand in advance that the calculation method chosen must be able to measure the
investment results achieved and allow investors to compare the investment results with
the results achieved by benchmarks, other portfolios or other investment managers. There
are various methods of calculating investment performance and basically these methods
 are divided into 2 groups: (1) without consideration of risk factors and (2) with
consideration of risk factors.

Without Consideration of Risk With Consideration of Risk Factors

Factors
Holdng Period Return (HPR) Sharpe Ratio
Holding Period Yield (HPY) Treynor Ratio
Arithmetic Rate of Return Jensen Ratio
Geometric Rate of Return
Money (Dollar) Weighted Rate of
Return & Internal Rate of Return (IRR)
Time Weighted Rate of Return
(TWRR)

In addition, there is also a calculation method called Attribution Analysis, in which

investors can identify the contribution of each sector or investment instrument relative to
the overall portfolio performance. In gambling, attribution analysis is a tool for
measuring evaluating portfolio performance which is used to analyze the ability of an
investment manager.
Through attribution analysis, investors can identify the impact of investment
decisions made by investment managers related to overall investment policy, asset
allocation, selection of investment instruments and transaction activities. By comparing
the performance of the portfolio with its benchmarks, it can be seen whether the
investment manager is really good or just being lucky during that period. Attribution
analysis is usually used by institutional investors to identify the best investment managers
who can help maximize the performance of their portfolios .

F. INVESTING INTERNATIONALLY THROUGH INVESTMENT COMPANIES

One of the problems potential by investing internationally is a cost that is much higher .
The average expenditure ratio for world equity funds is more than 1.5 percent

1. Fund Category for International Investment

US investors can invest in internationally by buying and selling mutual fund, ETF,
or closed funds end. Funds that specialize in securitiesn internationally have become
many and well-known in a few years terakhir.Reksa funds that invest in international
make investors exposure to markets outside the country, which may alone behaves
differently from the US market. However investors may also be exposed to currency
risks, Approaches alternative to investing internationally is looking for exposure
internationally by investing in companies US with revenue that is strong on the outside
the country, which is an extension of the natural from concept globalization.
Fund internationally tend to be concentrated mainly on stocks internationally.
Instead, funds globally tend to save at least 25 percent of the assets they are in the
United State. Fund one country ends closed concentrated in the securities of the Country.
 Together with mutual funds internationally, ETF International offers exposure to various
sectors outside of the country, region, state, and benchmarks measuring global. For
example, investors can choose funds that are concentrated in the global energy sector;
Pacific region; countries such as Austria, South Korea, Italy and Japan; and the
index as the index Nikkei 225. Take note that funds internationally generally do
not protect the risk of currency money , and because the US investors benefited when
eyes of money foreign strengthened relative to the dollar.

G. THE FUTURE OF INDIRECT INVESTMENT

1. Definition of Investment
An investment is the effort of a person or company to make investments or assets
within a certain period of time with the intention to get a greater profit in the future. For
example, when a person or company spends some funds to buy an asset or something
that can increase the productivity of that person or company, then this can be said to be
an investment.

2. Indirect Investment
Next is indirect investment or portfolio investment. In this investment, the investor
is not directly involved in the management of his investment fund. Generally, indirect
investments are only in the form of financial assets in the form of stocks or bonds.
Then, who manages it if it's not the investor directly? The answer is investment
managers. Therefore, if you become an investor in indirect investments, you do not need
to analyze and make decisions in investments. Let the investment manager manage your
portfolio.
Because investors here only act as shareholders and do not need to be physically
present to control the daily activities of investment management. Usually people who
want to make investments do not directly utilize the services of investment managers by
using mutual fund products.
Through mutual funds, investors gather in one container with the intention to raise
investment funds in a securities portfolio that will then be managed and entrusted by the
investment manager.

3. Advantages and Disadvantages of Indirect Investment

Investasi indirectly has the advantage of its activities that have been regulated by
investment managers who are already experts in the management of investment funds.
So, the investor here only needs to provide investment funds and entrust them to
the investment manager to manage the funds without the hassle of managing and
managing the invested shares.
Another advantage is that indirect investments are easy to disburse, therefore
people who need short-term investments will prefer this. While the drawback is that
shareholders do not have full control over the management of funds and the activities
of the invested companies.
 If there are losses related to managerial negligence of the investment fund recipient
company, then the investor can only bear the risk without being able to make a lawsuit
against the company in question.

4. Indirect Investment Benefits

The benefit of indirect investment is to benefit from the business of investing.
These benefits can also add value to your wealth assets and become a passive income for
you.
If your passive income is already high, you can also be independent in terms of
finances by relying on it. You don't have to work hard anymore. In addition, by investing
you have saved your future because your investment has also become your savings in
the future. Now it's just how you choose the investment that suits you. If you have
a large capital and understand the world of stocks, then direct investment can be the
right investment field.

H. HEDGE FUNDS
Global investment managers or commonly known as hedge funds are private
collective investment contracts that are subject to performance-based service feesand
areusually offered on a limited basis to high-end investors. In America hedge funds are
offered only to accredited investors, and because of these restrictions hedge funds are
exempt from sec rules, NASD and other regulatory agencies. Hedge fund activities are
limited by an agreement that governs the management of funds specifically, so that these
hedge funds can implement complex investment strategies, conduct "long" or "short
selling" transactions of assets, conduct futures tradingtransactions, swaps and or other
derivatives transactions. These hedge funds often hedge their investments against the
movement of equity and exchange prices, because their main target is to generate returns
that are not closely related to financial markets in general.
1. Key Characteristics of Hedge Funds
a. Only for limited investors
These collective investment contracts are only open to "accredited" investors or
investors who meet the minimum requirements. Fund raisings are only allowed to
high-end investors with annual incomes of more than $200,000 over the past two years
or have a net worth of more than $1 million.
With these conditions it is considered that investors can handle the risks that can
come from investments for a wider and larger scale.
b. Offers more investment flexibility than other types of investais
Hedge fund investments are vast and limited to their mandates only. Basically,
funds can be invested in anything like property, land, stocks, forex, etc. Instead,
mutual fund investments should hold on to stocks/bonds and are usually long-term.
c. Hedge funds use leverage
These investment funds often use borrowed money (or leverage)to strengthen
returns. As we saw during the financial crisis of 2008, leverage can also wipe out
hedge funds.
 d. Cost structure
Instead of charging the expense ratio alone, hedge funds charge the ratio of
expenses and performance costs. This fee structure is known as "Two and Twenty" –
an asset management fee of 2% and then a 20% cut of any profit made. In addition to
the above characteristics, there are also specific traits that define what a hedge fund
is. However, basically, this fund is a private investment vehicle that allows for first-
class investors to invest. Hedge funds can do whatever they want as long as the
investor reveals his strategy.
These characteristics seem very risky. Several financial explosions occurred,
involving the presence of these investment funds. Some talented financial managers
can generate outstanding long-term returns because of their flexibility.
2. Risk of Hedge Fund
a. Concentrated investment strategies expose hedge funds to potential large losses.
b. Hedge funds typically require investors to lock in money over a period of years.
c. The use of leverage or borrowed money, can turn what should be a small loss into a
significant loss.