Our Fee Structure
In finance and investing, fees rarely sit on the first page. Go to any priority-bank events and you’ll often notice: fees are often vague, downplayed, or hidden in fine print. At Omaha Investments, we do the opposite. Our fees are the first thing you see—top-left on our website—because we believe in transparency, clear disclosure of conflicts of interest, and aligned incentives with our clients.
In the investment industry, fees are typically charged in three ways:
- Transaction-based fees (commissions) – paid whenever trades are made.
Examples:
- A broker charges 0.15% per stock trade every time you buy or sell shares
- A wealth manager/advisor charges 1% transaction fee for buying or selling mutual funds/bonds
- An insurance advisor earns a commission for selling you unit-linked insurance & investment plan
- Management-based fees – a percentage of assets under management (AUM).
Examples:
- A mutual fund or investment advisor charges an annual 2% management fee on your invested assets
- If you have Rp 1,000,000,000 under management, and the fee is 2%, the advisor earns Rp 20,000,000 per year
- Performance-based fees – a share of profits.
Examples:
- An investment manager charges 30% of profits
- If your Rp 1,000,000,000 portfolio earns 15% (Rp 150,000,000), the investment manager keeps 30% of that Rp 150,000,000 = Rp 45,000,000
At Omaha Investments, we believe transaction-based fees, or commissions, are the worst system for clients. Why? Because they create the wrong incentive — the advisor benefits from trading more or simply selling investment products with the highest commission, without taking into account whether the client actually makes money. Studies and experience show that excessive trading and high fees erode returns over time, making this structure misaligned with your long-term wealth creation.
Performance-based fees may look attractive at first glance, but they also come with trade-offs. On the positive side, they can align advisor incentives with client outcomes — if the portfolio grows, both parties benefit; if it doesn’t, no fee is paid. However, they also create potential misalignment: advisors may feel pressured to take on excessive risk in pursuit of short-term gains, since they participate in the upside but do not share in the downside. This can result in portfolios that are riskier than what is truly suitable for the client.
Management-based fees, by contrast, offer simplicity and predictability. Clients know exactly what they will pay each year, regardless of market fluctuations. This stability makes planning easier and reduces the incentive to chase short-term results. However, the drawback is that advisors might become inclined to take less risk and focus more on capital preservation. But at Omaha Investments, we don’t see this as a drawback — it reflects our philosophy. Our priority is to protect capital, manage risk carefully, and pursue steady wealth creation.
“Show me the incentive and I will show you the outcome.”
— Charlie Munger
At Omaha, we believe fee structures shape behavior. That’s why we avoid commissions and performance-based fees — they create the wrong incentives. Instead, we choose a simple management-based fee structure that is transparent, predictable, and ensures that our interests are fully aligned with yours.
Our fees are lower than the average charged by mutual funds in Indonesia — in fact, we have not found any equity mutual fund in Indonesia that charges as low as we do. To understand our exact fee structure and how it applies to your portfolio, schedule a complimentary call with us.