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Asset Management Companies (AMC)

As mutual funds are growing in popularity, asset management companies have become pivotal in the financial market. These companies collect investors' funds and invest the pool in diversified portfolios across equities, debts, and other asset classes.
What are AMC mutual funds?

Simply put, AMC companies in India manage the funds of individuals and companies. They invest funds pooled from individual investors in various securities to generate optimal returns.

An asset management company helps investors to invest in diversified portfolios ranging from high to low in the risk spectrum. They employ seasoned and experienced professionals to design investment schemes taking into consideration market risks, industry risks, return risks, and political risks to meet return targets on investment.

AMC companies in India invest pooled funds in different asset classes to meet the financial objectives of their clients. Like a debt fund will invest in low-risk government bonds, while an equity fund targets higher returns by investing in company stocks.

Working with several groups of investors allows AMCs to diversify portfolios, efficiently mitigate risk, and access better capital appreciation. An AMC should efficiently identify the best investment options for its clients according to their investment criteria and risk appetite. Their primary purpose is to buy smart investment options that will increase the overall investment value of participating investors. They are the buyers in the financial market, which separates them from the other players in the domain like the investment banks, brokerages and insurance companies, who engage in selling funds in the market.

According to a list available in AMFI, there are forty asset management companies of various sizes registered in India. Recently, the popularity of AMC mutual funds increased significantly which boosted the total asset under management or AUM of these companies. The AMC companies in India recorded 5x growth in total AUM from February 2012 to February 2022.

Here we have discussed how these companies function so you can make an informed decision.

How Do Asset Management Companies Function?

An asset management company manages the funds of its investors against fees. So basically, when you invest in AMC mutual funds, you invest in a portfolio offered by the AMC company.

The AMC company invests the corpus in different securities to generate returns matching the objective of the fund. The AMC company accomplishes the task by adopting the following measures.

Market research
AMC companies in India depend heavily on market research to study current trends, macro and micro economic factors, and political aspects to select investment securities. They also dive deep into the investment requirements of investors and personal finance needs to design investment schemes.

AMC mutual funds engage the services of fund managers and research teams to choose the best investment options from the market.

Asset allocation
An important role of an asset management company is to allocate the asset to various asset groups. The company will distribute the capital depending on whether the scheme is a debt or an equity fund.

Creating portfolios
Depending on the market findings and theme of the fund, the fund manager creates portfolios of securities. In the case of AMC mutual funds, the asset managers make decisions on which securities to purchase or sell, backed by the research done by the internal team.

Tracking performance

Monitoring portfolio performance is one of the primary roles of fund managers.

Asset managers provide regular updates on the fund's performance with regards to buys and sell, repurchases, NAV, return on risk, and portfolio changes which will impact the performance of your investor.

The role of Asset Management Companies in India

The AMC companies perform the role of mediators. Their primary task is to invest funds collected from investors into different securities to generate returns. The profit earned gets distributed among all investors. The AMC mutual funds operate in a regulated market which helps maintain a high degree of transparency and authenticity. It makes mutual fund investment a safe option for small investors.

Investing in mutual funds offers several benefits.

  • Access to a diversified investment portfolio. The fund deposited is invested in various securities.
  • It allows investors to earn decent returns without directly participating in the market.
  • Investors can enter or exit at their convenience.
  • One doesn’t have to open special accounts to invest in AMC mutual funds.

Final words

All asset management companies in India are regulated by AMFI and need to follow government guidelines to invest in the market, which makes AMC companies safe for investing. Over the years, mutual funds have emerged as an excellent investment option with flexible investment options, compounding returns, and rupee cost averaging.


What is a mutual fund investing?

Mutual funds are simple investment products that allow investors to invest in a large variety of assets through a professionally managed pool of funds. Mutual funds are offered through AMC companies in India. The AMFI website defines mutual funds as a trust that collects funds from different investors sharing a common investment goal to invest in securities like equity, bonds, etc. The income/returns generated from the investment get distributed among investors.

How to choose a mutual fund?
Keep the following in mind.

Investment objective:Investment objective: Invest according to your financial goal.

Net Asset Value (NAV):The performance of a mutual fund is measured by the NAV, which refers to the market value of the securities held by the fund.

Expense ratio:Depending on the type of fund you have selected for investing, the expense ratio will be higher or lower. It is the cost of managing your money charged by the AMC company.

Fund manager’' track record: Fund manager’' track record: The fund manager's ability to study the market and make sound investment decisions is the key to your profit. So, you must always check the fund manager's performance before investing in AMC mutual funds.

How to redeem mutual fund units?

AMC companies in India, like Angel One, allow investors to redeem their mutual fund units online. You can raise a redemption request anytime by login into your account.

Alternatively, you can download and submit a duly signed Redemption Request form at the AMC's or the registrar's designated office. The details you must provide in the form are listed below.

  • Holder's name
  • Folio number and/or PAN card details
  • Scheme name with plan details
  • Units to be redeemed
What is an AMC company?
An asset management company manages and invests investors’ money in mutual funds. The purpose of an AMC company is to help investors grow their wealth through investing in mutual funds - pooled funds from individual investors invested in diversified portfolios. AMC companies offer their services against charges.
Who regulates the AMC companies in India?

The AMC companies are governed by the RBI and Ministry of Finance like banks. The AMCs are required to follow government guidelines for investing in various securities.

Is mutual fund investment safe?
The AMC companies in India are governed by the RBI and the Ministry of Finance. However, it is vital to note that mutual fund investment carries risks like an equity investment. So, one must understand the risk factors before investing.
How many asset management companies are there in India?
There are forty-four registered asset management companies in India. These companies manage investors’ funds - invest in various securities to generate optimal returns. Always check the registration and track record of the AMC company before you invest.
Which is the largest Indian AMC company?
The SBI Mutual Fund is the largest AMC in India with a total Asset Under Management (AUM) of ₹7.22 lakh crore on December 31, 2022.

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