An asset management company (AMC) manages the funds of the mutual fund. An asset management company registered under the company’s act 1956. The mutual fund pays fees to the AMC for managing their fund. The AMC is also always under supervision of SEBI. 

How do AMCs work?

  Usually AMCs are considered as side firms. They help their clients  to invest money or buy securities. They decide what to buy by their on in house research data and analytics. but they also take public recommendations from sell-side firms.

An AMC will have a slew of researchers and analysts who report their market findings and trends to the fund manager. Based on these findings and investment objectives, he chooses which securities to buy, sell or whether to hold them. This is how a company builds a portfolio, which depends predominantly on the experience and expertise of the manager.

What are the SEBI & AMFI guidelines for AMCs that investors should know?

1. An AMC shall not act as the trustee of any mutual fund
2. The 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. They shall submit quarterly reports of each year on its activities and the compliance with these regulations to the trustees
4. Key personnel of an AMC should have a clean record (not convicted of any economic offense)
5. The Chairman of AMC should not be a trustee of any mutual fund
6. The AMC should have a net worth of not less than Rs. 10 crores.