Asset Management Company
An Asset Management Company (AMC) is one which collects money from the public and manages it on behalf of them in lieu of a fee. Before collecting the money, the company declares the investment objective or to be more elaborate they informs the sectors in which they will invest. The ratio of various products that they will maintain in the portfolio. The risk associated with the products, etc. They are regulated by SEBI (Securities and exchange Board of India)
Functions of AMC
An Asset Management Company acts as the investment advisor to the sponsors of Mutual Funds. Mutual Funds are trusts, which collects money from the public and appoints the Asset Management Company’s to invest and manage the money or the assets. Their main sources of income are the entry or exit load that they charge and the administrative charges they charge every year. They also charge management fees as a percentage of the amount of assets they manage. They also book an amount based on the performance of the funds.
An Asset Management Company broadly works through the following departments:
- Operations and Accounting
- Fund Management
- Sales and Marketing
AMCs enable us to take exposure in different stokes by investing a very small amount and take advantage of diversification.
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