Asset Management Company

Asset management companies (AMC) are financial institutions that pool investment from investors and invest the same across different market instruments to gain higher returns. An asset management company in India handles the fund by identifying the investment in stocks, bonds, debt, etc. The main aim of AMC is to identify the opportunities based on investors' objectives and also aims to optimize the return on investment. If you are looking for the best AMC in India to optimize your returns, this article is for you.
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What is an AMC in Mutual Fund?

The answer to the question, “What is an asset management company?”, is that it is a company offering investment solutions, intended to cater to different types of investors. An asset management firm offers these solutions in the form of mutual fund schemes for different investment goals and risk tolerance. 

You can choose a fund of your choice and invest in it. The company then pools the money of the investors of a particular scheme and then collectively invests it. This is done in different investment options. 

The role of an asset management company after that is to oversee your investment and ensure that any actions taken are in alignment with the overarching objectives.

How do AMCs Manage Mutual Funds?

An asset management company functions with the help of an investment team that manages the schemes. Mutual funds management in these companies is done through fund managers, who track the performance of different investment avenues.

The fund managers and research team will also assess various micro- and macro-economic risk factors, such as: 


  • Market risks 

  • Industry risks

  • Political risks

  • Return risks


With this research and analysis, the team then decides how much to invest in different investment options.

The allocation also depends on the main objective of the scheme. For example, if it is an equity focused fund, the predominant investment will be done in equities. It is important to note that even in an equity focused fund, 100% of the fund value will not be invested in equity.

The team will invest a portion in other investment options to mitigate the risk associated with equities. This helps ensure that your investment grows in the long run. After the allocation of funds, the team creates a portfolio to decide which securities to sell and buy.

The portfolio created by the management team of the investment management firms affects the return that you get from that particular scheme. To ensure that you get consistent returns, in line with the risk and objective of the scheme, the team will regularly review the performance. 

In instances where performance isn’t up to par or within the desired scope, these teams make changes accordingly. For any market-linked commodity, such changes are necessary to sustain growth.

Types of Mutual Funds Offered by AMCs

Fund management companies offer numerous schemes in different categories for different goals and risk levels. In fact, some of the biggest asset management companies in India offer 100+ schemes tailored to a specific goal and risk profile of the investor. 

General categories of these schemes include equity, hybrid, debt, liquid, ETF, and more. It is essential to remember that each scheme, even in the same category, has different investment objectives and offers varying returns. 

As such, the schemes also differ for the AMCs in India. In addition to the above categorisation, an asset management company also divides a scheme into a direct plan and a regular plan.

A direct plan is the one where you invest directly through the AMC and a regular plan is the one where you invest through an intermediary. To invest in a direct plan, you need to do your own research and choose a scheme accordingly. 

In a regular plan, a financial advisor helps you manage and invest your funds. However, regular plans have additional charges (commission) that the AMC pays to the intermediary from your returns. 

This results in a comparatively lower returns than a direct plan. Based on your knowledge, experience, and expected returns, you can choose either a direct or a regular plan.

Features of Mutual Funds Offered by AMCs

Here is an overview of the features of mutual funds that help grow your wealth:


  • Flexibility in Investment

An asset management company generally offers periodic and lumpsum investment options. In periodic investment, also known as SIP, you invest a fixed amount every month. Some of the top AMCs in India offer the SIP mode with a minimum investment of just ₹500.

In a lumpsum investment, you invest a one-time lumpsum amount in a scheme of your choice. With this flexibility, you can invest as per your finances and financial strategies.

  • Simple Investment Process

Regardless of which scheme and plan you choose; a majority of the AMCs in India offer a simple investment process. These you can complete in just a few clicks. Once you choose the mutual fund you want to invest in, you can easily invest online and complete the transaction after completing the KYC protocols.

  • Liquidity of Investment

Wealth management companies offer numerous mutual fund schemes, some of which may not even have a lock-in period. This makes your investment liquid, allowing you to redeem whenever you want. AMCs also allow you to redeem your investment before the lock-in period, however this may attract an exit load from your returns.

  • Diversification of Portfolio

As mentioned, investment management firms offer mutual fund schemes that have a diversified portfolio that mitigates the risk. This allows you to enjoy a balance in your investment, which in turn, helps ensure that your investment corpus grows in the long run.

Benefits of Investing in AMC Mutual Funds

When you invest through an asset management firm, there are several benefits that you can enjoy. Here’s a look into the benefits that you get:


  • Mutual funds management is handled by a team of professional fund managers to ensure intelligent investing 

  • Diversified portfolio created by the investment team are based on insights and thorough analysis 

  • Grants access to larger, higher quality assets, which are otherwise inaccessible to retail investors due to the value of the fund

  • Choose from multiple schemes that cater to different investment goals (retirement, savings, wealth generation, etc.)

  • Flexibility to choose from a periodic investment plan or a lumpsum investment based on your finances

Taxation on Mutual Funds Offered by AMCs

The returns from a mutual fund offered by an AMC are subject to taxation under various sections of the Income Tax Act, based on various factors. These factors include: 


  • The type of scheme you invest in (debt, equity, etc.) 

  • The type of returns you gain from the scheme (dividend, LTCG, STCG, etc) 

  • The returns earned

  • The holding period of your investment


You can assess the taxation of your mutual funds before you invest to ensure that it is tax efficient, helping you save on taxes. You can even choose tax-benefit schemes like the ELSS to enjoy tax deductions under section 80C.

Risks Associated With AMC Mutual Funds

Although investing through an AMC has benefits, there are some risks that you should know to make an informed decision. 

General risks associated with investing in mutual fund by an AMC are:


  • Different charges (management fee, entry load, exit load, etc) that can reduce your returns

  • Fund managers may not be able to manage the scheme in accordance with the market volatility, impact the returns

  • Underperformance of the scheme resulting in a reduction in the ultimate gains from the scheme


Before you invest in a mutual fund by an AMC, be sure to do your due diligence to account for all the risks involved. Consider the reputation of the company, the credibility of the fund and asset managers, the value of the fund, and charges levied by the company.

Along with this, you also need to review your goals and risk tolerance to invest objectively. Assessing these factors will allow you to choose from the top asset management companies and make a decision that keeps your corpus secure while ensuring its growth.

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