Written by Ilham Indra, Marketing Communication at PT Korea Investment Management Indonesia. Reviewed by Compliance before publication.
Most Indonesians' money sits in savings accounts without a clear purpose. Money market funds speak to that group, not to someone weighing up shares.
What a Money Market Fund Is
A money market fund is a mutual fund that places all its money in money market instruments and debt securities maturing in under one year. It fluctuates least of the five fund types, which is why it is commonly used for money that may be needed soon.
What Sits in the Portfolio?
Time deposits with banks.
Debt securities with less than one year remaining to maturity.
Other money market instruments permitted under applicable rules.
That short maturity is the source of the stability. The shorter a debt security's maturity, the less a change in interest rates affects its price.
What Goals Does It Suit?
An emergency fund
An emergency fund must be available at short notice and must not swing widely. Those two conditions are why money market funds are commonly used for it.
Goals under one year away
Money for needs already scheduled within months — school fees, travel, a planned purchase — sits at the horizon this type is built for.
A temporary parking place
Money waiting to be allocated elsewhere is often placed here first, because redemption is relatively quick compared with longer-dated instruments.
How Does It Differ from a Deposit or Savings Account?
Aspect | Savings account | Time deposit | Money market fund |
|---|---|---|---|
| Return | Interest set by the bank | Interest fixed in advance | Follows net asset value, not fixed in advance |
| Insurance | Insured up to a limit | Insured up to a limit | NOT covered by deposit insurance |
| Access | Any time | Locked for a term | Trading days, per the prospectus |
| Managed by | A bank | A bank | An OJK-licensed investment manager |
The insurance row is the one most often missed. Time deposits are covered by the Lembaga Penjamin Simpanan up to certain limits; money market funds are not.
What Risks Remain?
Small fluctuation does not mean no risk. The value can still fall, including below the initial subscription value.
The risk of a falling net asset value if portfolio instrument prices decline.
Default risk on the issuers of instruments held in the portfolio.
Liquidity risk if large redemptions occur at the same time.
No mutual fund is risk-free or guaranteed to profit. Past performance does not guarantee future performance.
How Long Does Redemption Take?
The payment period is set in each product's prospectus and is not always immediate. Read the terms before placing money you might need at short notice.
About the Manager
PT Korea Investment Management Indonesia is an investment manager registered with and supervised by the Financial Services Authority under licence number KEP-50/D.04/2019, operating in Indonesia since 2019.
Frequently Asked Questions
Is a money market fund risk-free?
No. It fluctuates least of the five fund types, but the value can still fall, including below the initial subscription value.
Is it covered by deposit insurance?
No. That scheme covers bank deposits such as savings and time deposits, not investment products.
Is a money market fund better than a time deposit?
They differ rather than one being better. A deposit pays interest fixed in advance and is insured up to a limit; a money market fund fixes nothing in advance and is not insured.
How long does redemption take?
The period is set in each product's prospectus and is not always immediate. Read the terms before placing money you might need at short notice.
Does it suit an emergency fund?
It is commonly used for emergency funds because it fluctuates little and redeems relatively quickly. Suitability still depends on individual needs and risk profile.
What sits in the portfolio?
Time deposits, debt securities with under one year to maturity, and other money market instruments permitted under applicable rules.
Next Steps
Compare it with the other fund types in our article on types of mutual funds.
See the range of funds managed by PT Korea Investment Management Indonesia on the Products page.