An Asset Management Company (AMC) or fund house is a firm that invests pooled funds from individuals and institutional investors in securities. An AMC is formed after seeking necessary approvals by the markets regulator the Securities and Exchange Board of India (SEBI). An investor investing in an AMC is purchasing a portfolio of assets that are being offered by them. A fund manager then takes investment decisions and whether or not the investments made will prove to be beneficial to the investors.
As an investor, it is essential to do the appropriate research before choosing an AMC. Here are a few factors to take into account for the same:
Work Profile of AMC
Asset Allocation: An AMC has to remain careful while making investments in various equity and debt instruments. This is crucial to win investors’ trust and confidence. The timing of buying or selling is dependent on the decision of a fund manager who is assigned to manage the funds and appropriately allocate the pooled amount in various asset classes.
Research and Portfolio Construction: A fund manager in association with a team of analysts undertakes market analysis and draws adequate conclusions to create a portfolio. The aim of a fund manager is to create a balanced portfolio that should be able to tide over a rough patch in the equity market. A portfolio is constructed while taking into account the various risk factors associated with each asset class.
Assessing Fund Performance: An AMC is answerable to investors with regard to investments undertaken. An AMC is required to carefully assess the performance of a particular fund on a periodic basis taking into account factors such as net asset value (NAV), and fund returns, etc.
Before Choosing AMC
Eye on Track Record: First and foremost, evaluate the track record of the AMC carefully. The AMCs are required to make investments based on the investment objective. However, as an investor, it remains crucial to keep an eye on the track record of the fund house. There could be possible a change in the fund manager, an alteration in the returns of the scheme managed by the fund, etc.
Market Reputation of AMC: A firm offering consistent performance, a proven track record, and experienced management are key factors that highlight its reputation.
An investor needs to remain watchful of all the crucial information related to the AMC. All such details can be gathered by visiting a particular company’s official website.
Experience of Fund Manager: Considering that a fund manager is an individual who is responsible for making an investment decision on behalf of the investor, they should be experienced. Generally, fund managers are market experts who hold relevant years of experience in the capital market. However, it makes sense to keep track on the credentials and work experience of the fund manager.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.