What are Asset Management Companies?

If you have been investing in mutual funds or if you are exploring the world of mutual funds wanting to start investing, you should also know who manages these funds and how they work. The asset management company or AMC is instrumental in the functioning of the mutual funds it offers and plays a crucial role in its performance. Keep reading to find out more. 

What are asset management companies, and what do they do?

An asset management company is a company that takes money from different investors and invests it further in different securities like stocks, bonds, real estate, and more. An AMC can offer several mutual funds, index funds, hedge funds, or exchange-traded funds at a time. Each fund is managed by a fund manager along with a research team that carries out research to help the fund manager make the right decisions in accordance with the fund’s scheme. There are several AMCs in India. Some of these include Axis Mutual Funds, Nippon India Mutual Funds, Aditya Birla Sunlife Mutual Funds, Franklin Templeton Mutual Funds, and many more. 

Here are some functions of an AMC:

  • Research: The AMC is responsible for carrying out research and analysis. A mutual fund’s performance can be affected by several factors, such as political events, micro, and macroeconomic factors, market trends, and more. The AMC conducts research on all of these factors.
  • Performance reviews: When investors invest their money in mutual funds, they also want to know how their funds are faring in the market. AMCs conduct performance reviews and updates on the portfolio composition, the sale, and purchase of securities. AMCs also offer customer service to investors in case of queries or issues. 
  • Asset allocation: The AMC takes care of the asset allocation of mutual funds, depending on their type. For instance, a debt fund will have more fixed-income securities. On the other hand, an equity fund will be more concentrated on equities. 
  • Portfolio creation: The decision to buy, sell, and hold securities is decided by a group of experts in the AMC. The portfolio is created based on the research carried out earlier. 

How can you select a good AMC for mutual fund investments?

Here are some things you can do:

  • Research a bit: Go through the different AMCs in the market and compare their mutual funds. Check the past performance of each company and then pick one that has performed optimally.
  • Look at the fund manager’s performance: An AMC is as good as the fund manager. So, when you check the past performance of the company, remember to do the same for the fund manager too. 
  • Check the fees: AMCs may charge a fixed fee or a commission. Make sure to check the fee charged by the AMC before you decide to invest in it. 

To sum it up

Picking mutual funds can be confusing, but assessing the performance of the AMC can be a suitable way to decide the best mutual fund schemes for yourself. Regardless of what you choose, Tata Capital offers the Moneyfy App where you can invest your money conveniently and safely and enjoy seamless investing no matter where you are.