What is an Asset Management Company (AMC)? And its role in Mutual Fund sector.

Asset management basically means managing money for individuals via stocks, shares, bonds, securities and cash equivalents. The main objective of asset management is to collect fund from individuals then use and make them as reliable and optimum as possible. Assets Management Company or the fund house basically is the companies registered with SEBI to make investment or disinvestment decisions of a Mutual Fund companies.

Asset Management companies manage Mutual funds, hedge funds and pension plans and these companies charge a nominal fee or commission to its clients for managing their funds.

The role of an Asset Management Company:

1. An AMC invests the pool of funds collected from various clients of it’s with the trust deed and the positive investment objective of the related schemes.
2. An Asset Management Company follows the risk management guidelines laid out by Association of Mutual Funds in India (AMFI) and Securities and Exchange Board of India (SEBI)
3. An Asset Management Company plays the role of providing crucial information to its clients that will have a direct impact on the unit holding nature of the investors.

4. Asset Management company has a duty to send its investors regular and important updates about sale and repurchase of investments, its NAVs, portfolio details etc.

There is a history of Asset Management Company in India as well. In 1963 the Government of India and RBI with mutual understanding formulated the Unit Trust of India- the very stepping stone in the field of Mutual Funds in India. Gradually with time the need for an impartial regulator of investments rose to the need and then the Government of India permitted Public sector Banks and Institutions to set up Mutual funds. Consequentially, the SEBI Act (1992) was passed, and AMC was made integral to the mutual fund structure. In the year 1992 consequentially the SEBI Act was passed and Asset Management Companies were made an important and integral part of the Mutual fund structure.

This was all about AMCs. Furthermore, there is much more to know so if one wishes they can search on Google or any other search engine platform and get details and get answers to their queries about Asset Management Company. Happy Investing!

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