Simply put, as their names suggest, Asset Management Companies (AMCs) are entities that manage your money or assets for you. Investing directly in the market could put your capital at risk due to lack of research or insufficient analysis on a sector or trend.
Here is where an AMC comes to your rescue with its professional skills on market research and analyses to help you generate better returns or make your money work as hard as you do. All AMCs come with an investment objective or financial objective.
Just think of it like investing for your retirement, child’s education or marriage goals. Here a long-term objective is being set. However, if you are investing for a short-term goal, your investment objective will obviously be for the short term. Similarly, AMCs come with their own financial objective or theme which helps the asset manager to decide how, where and when to invest through market securities or other asset classes.
As an investor, each AMC gives you many investment choices under one umbrella. An AMC that models itself on different themes or financial objectives would have assembled a researchers and analysts accordingly. A separate team is allotted to each fund manager. So when you invest in an AMC, you purchase the portfolio it offers and depending on your investment objective, you can pick an investment which falls in line with your goals.
When choosing an asset management company, you can assess the price versus the value it offers on your investment. The reputation of the AMC is important. So going through reviews and checking consistency of its past performance should help you get more clarity. No AMC will hire a fund manager with less-than-impeccable credentials only due to the fear of losing a customer, but it is always good to do your homework before you invest.An AMC faces a lot of flak from investors and trustees if its investment decisions are not justified. If you hold units in any AMC, it will provide you with information that have a direct impact on its holdings. As an investor, you will receive regular updates on sales and repurchases, NAV portfolio details etc.