Last Updated:
An AMC manages mutual fund investments and the money pooled from various investors.
AMCs are mandated to be registered with SEBI. (Representative Image)
One of the ways to compound wealth over time is to invest in mutual funds. By taking calculated risks, you can generate significant returns from these instruments. A key factor that determines the outcome of your investment is how the mutual fund is managed.
This is where the Asset Management Companies (AMCs) play a major role. Here is an explanation of what AMCs are, what they do and their importance in managing mutual funds.
What Is An Asset Management Company (AMC)?
An AMC is responsible for managing the investments made by investors into mutual funds. It pools the money from different investors and invests it in securities such as equity, depending on the requirements of the scheme and market conditions.
These institutions are registered with the Securities and Exchange Board of India (SEBI). Fund managers at the AMC take care of the portfolio management for their mutual fund schemes.
Asset Management Company (AMC): Role And Importance
Expertise: AMCs employ professional fund managers who have the necessary qualifications to take care of mutual fund investments. Their skills ensure that they can make necessary modifications to the portfolio to generate maximum returns.
Diversification of Portfolio: The market for mutual fund investments is full of options. You can invest in different instruments according to your taste by investing in the mutual fund schemes offered by various AMCs.
Economies of Scale: As AMCs pool funds from a large number of investors, they can leverage their economies of scale to make investments, which may not be possible for an individual investor.
Transparency and Ethical Conduct: All AMCs are regulated by SEBI and need to function under the guidelines laid out by the capital market regulator. This ensures ethical conduct. Industry body, Association of Mutual Funds in India (AMFI), also keeps a watch on the functioning of the AMCs.
Accessibility: It is very easy to invest in a mutual fund offered by an AMC. You can directly visit the website of the AMC or use a third-party app to invest.
Functioning Of An Asset Management Company
Research: The fund managers at an AMC need to research the prevailing market conditions to guide the portfolio of a particular scheme.
Portfolio Management: According to the investment objective of the scheme, the fund manager will manage the portfolio of the mutual fund scheme.
Performance Review: AMCs keep investors updated about the status of their investments.
To conclude, AMCs ensure professionalism and transparency in running mutual fund schemes. It is important to research the credentials of the fund manager who is responsible for managing a scheme before investing.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
- Location :
Delhi, India, India
- First Published: