It is possible for an asset management firm to oversee several different types of investment funds, each with their own set of goals. In an AMC, the investment strategy is determined by fund managers after they have established the investment goal and assessed the associated risks and rewards. The primary goal of an AMC debt fund, for example, would be to achieve modest returns while minimizing risk by investing largely in securities and sovereign bonds.
What is Asset Management Company?
Investors’ funds are aggregated by an asset management company, which then invests them in a variety of assets, such as stock market securities, debt instruments such as bonds, property investment, and metals.
- People who would gain from an investment manager’s expertise, but don’t want to spend their valuable time doing so, tend to gravitate toward asset management companies (AMCs).
- With only a few thousand rupees in the bank, a modest retail investor will only be able to make a few stock purchases. This puts him at risk for extra losses if the company’s stock loses value.
- Investing in a large number of equities protects investors from the risks of concentrated investment in a small number of companies. To meet the demands of a wide range of investors, AMCs create a wide range of products and services. They design portfolios to meet the various risk appetites, tenures, and tax advantages that investors seek.
Functions of an Asset Management Company
AMC manages funds invested by investors. The fund’s returns are market-linked, meaning they fluctuate with the value of the fund. Higher returns might be expected if a fund is well run. Instead, a tiny fee known as a fund administration fee would be charged by the company.
- AMCs are accountable for the management of the mutual fund’s overall business operations. The first step is to decide on a fund’s financial objective, after which the asset classes will be chosen.
- These firms assist their clients in maintaining a well-diversified portfolio through the efficient management of investor funds and the purchase of assets and securities.
- The AMC relies heavily on this revenue stream. Increasing a fund’s number of investors and thus its revenue requires it to produce returns that are on par with those of its competitors.
- It’s critical to consider the asset management firm’s market reputation while making investing decisions. Investors have confidence in funds run by well-known and respected asset management firms (AMCs).
- In order to build a strong investor base and produce high-quality returns, an AMC employs a comprehensive approach.
How Are AMCs Regulated?
- The Securities and Exchange Board of India (SEBI) is in charge of regulating asset management companies (SEBI).
- As a further measure to guard investors’ interests, AMCs are also subject to passive regulation by the Association of Mutual Funds of India (AMFI).
Top Asset Management Companies (AMC) to Watch in 2022
- 1987 was the year that saw the launch of the SBI mutual fund. SBI, a government-owned bank, was the MF’s sole owner when it was founded. SGAM – Society General-Asset Management purchased a 37% stake in SBI’s mutual funds in 2004 after SBI’s disinvestment in mutual funds.
- As part of a global effort to merge asset management businesses with Credit Agricola, Amundi purchased Society General’s stake in the company in 2011.
- As of right now, SBI Mutual Fund is a joint initiative between the Indian banking giant SBI and the French investment firm Amundi.
- The HDFC Asset Management Company Limited, a subsidiary of the Housing- Development Finance Corporation Bank, offers mutual fund services. In partnership with Standard Life Investments, one of India’s leading asset management companies, HDFC created this mutual fund company, in which it owns approximately 57.3 percent of the shares.
How do Investors select AMCs?
- Investors need to thoroughly examine the AMC’s track record. It is prudent for investors to keep an eye on the AMC’s news, even though the AMC’s are mandated to invest in accordance with their stated investment objective.
- The mutual fund’s Asset Management Company (AMC) is responsible for the fund’s day-to-day operations and investments. Appropriate approvals from the Securities and Exchange Commission (SEC) are required for the establishment of an AMC.
- Investment in an AMC is really just buying the assets that the AMC is selling to investors. After this, the responsibility of looking after the investment decision, as well as determining whether or not the investors will benefit from the investments made, falls on the shoulders of the fund manager.
- As a general rule, investors prefer to invest in funds that are managed by reputed AMCs. As a result, it’s critical to consider the AMC’s standing in the marketplace.
- An AMC’s clients’ money is usually used to invest in these schemes, which invest in securities aligned with the AMC’s long-term strategy.
- A wide range of investment tools and good returns on investment are therefore critical when working with an Asset Management Company. Here are the top 10 asset management companies in India, along with the assets they manage.
- If the AMC hopes to maintain investor confidence, it must exercise caution when purchasing a variety of debt and equity instruments.
- It is up to the fund manager to decide when to buy or sell, as he or she is in charge of overseeing the money and deciding how it is distributed amongst the various asset classes.
(Hope you like this article. This article is for education purpose only. Please do not build up any perception based on the information mentioned above.)
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