Benefits of Investing with an AMC

Have you been thinking about spreading out your investments lately? Or even trying to expand your investments into new instruments. We are sure mutual funds crossed your mind at least once. While we think of mutual funds as one of the most important options for our investment choices, we also have to think about one of the main sources that links us to a mutual fund investment, and that is an AMC (Asset Management Company).

So, let us talk about everything you need to know about an AMC, shall we?

What is an AMC?

An AMC or an asset management company is a financial institute that manages and operates mutual funds and other investment instruments. AMCs invest in funds from investors in a diverse portfolio of securities. Typically, these securities are bonds, real estate, stocks, and commodities. They would also create and administer fund products in order to meet goals of investors. AMCs are always governed by the securities and exchange board and AMFI.

They appoint fund managers to manage every scheme and research analysts to align with them. AMCs usually charge a commission according to the client’s entire assets under management, and it is calculated as an annual percent that is paid every month.

A good example of an AMC is Groww AMC.

Functions of an AMC

The major functions of an AMC:

1. Portfolio Management – When you invest in a mutual fund, you invest in a portfolio of underlying assets; you should know that. The mutual fund is created on the base of a portfolio, which is undertaken by an asset management company. The process of managing this portfolio is entirely AMC’s responsibility.
2. Fund Administration – After the portfolio has been created for a mutual fund, and the fund is out in the market, the AMC also administers that fund.
3. Research and Analysis – The research and analysis to construct a mutual fund portfolio is done through an asset management company.
4. Client Services – The AMC provides services to clients such as offering them investment instruments, support, expertise on investments, and lowering risks to clients.
5. Risk Management – Risk management is one of the most important tasks of an AMC, and its core objective is to spread risks across investments, even when they involve high-risk instruments like stocks and equity.

6. Marketing and Sales – Marketing and sales holds up an important position with an AMC. Here, by marketing and sales we mean the AMC targets marketing for mutual funds, and other instruments of investments.
7. Regulatory Compliance – The mutual fund house complies with SEBI and AMFI as mentioned above. Only after licenses can an AMC be incorporated into the system.
8. Performance Monitoring – The performance of every mutual fund is constantly monitored by an AMC. This ensures that the fund is secure in times of market drops and economic conditions and it reaches its investment objective.                
9. Investment Strategy – The AMC’s fund a manager is the source to deciding on an investment strategy for the mutual funds they create to draw the most income.
10. Fee Management – The AMC collects a form of commission and cost from their clients to run the fund house. This fee is managed, reinvested or utilized by the mutual fund house.

Perks of Investing in Funds through an AMC

The Perks of Investing in Mutual Funds through an AMC:

• Liquidity – An Asset Management company makes sure that the funds you invest in are liquid (terms and conditions apply) to withdraw when required.

• Professional Management – The investments you make through an AMC are professionally managed vehicles by fund managers.

• Diversification – You can diversify your investments across different kinds of mutual funds through the various funds an asset management company provides.

• Economies of Scale – You can enjoy sale benefits through capital appreciation of mutual funds in the long run.

• Convenience – Asset management companies give you the ease of all under one roof.

• Accessibility – You can access asset management companies online effortlessly through applications and online portals.

• Transparency – AMCs are quite transparent, and make sure you know everything about your investment in and around the AMC.

• Regulatory Oversight – An AMC can make sure you abide with all the needs and essentials when it comes to your investments and regulations revolving around them.

• Variety of Options – You can choose from different funds, from different investment instruments, and you could diversify all your investment all under one roof.

• Tax Benefits – You can also avail of tax benefits through mutual fund investments on the whole of your returns under different slabs.

• Cost Efficiency – Mutual funds are cost effective, you can start off as low as Rs. 500 to invest in a mutual fund.

• Systematic Investment Plans – You get to invest through SIPs, which are also an effective way to invest at frequent intervals. 

This is just the tip of the iceberg; there is much more that you can enjoy once you start investing through an AMC.

Conclusion Now that you know how to go about your AMC-based mutual fund investment, you can get ready for a whole new journey. By now, you know that investing in mutual funds can look like a bright financial future ahead; you also need to know the exact pathway of getting in place to that bright financial future.