Asset Management Company

What is an Asset Management Company?

An Asset Management Company (AMC) is essentially the mutual fund company, which is appointed by the sponsor or the trustees. It invests the funds collected by its mutual fund schemes in securities as specified by the investment objective of each particular scheme. Here is a quick look at what an AMC does:

  • Invests the pool of funds in line with the trust deed and the investment object of the scheme.
  • Follows risk management guidelines specified by Association of Mutual Funds in India (AMFI) and Securities and Exchange Board of India (SEBI.
  • Provides information to unit holders that have a direct impact on their holdings along with regular updates on sale and repurchase, NAV, portfolio details, etc

Who are the regulators that govern AMCs?

An AMC acts under the supervision of the board of trustees and is primarily regulated by the Securities and Exchange Board of India (SEBI). Apart from SEBI, the Association of Mutual Funds in India (AMFI), formed by the association of SEBI registered AMCs, recommends best practices and oversees the functioning of the mutual fund industry. RBI also plays an important role in regulating AMC if the sponsors are backed by a bank.

The Ministry of Finance works as the appellate authority for all the regulations stipulated by these regulators. Here is quick look at some regulations that govern AMCs:

  1. An AMC shall not act as the trustee of any mutual fund
  2. 2.The asset management company shall not invest in any of its schemes unless full disclosure of its intention to invest has been made in the offer documents
  3. The asset management company shall submit quarterly reports of each year on its activities and the compliance with these regulations to the trustees.

Major Asset Management Companies