What Is an AMC in Mutual Funds?

Four jobs, in practice.

It creates the schemes, each with a stated objective and set of rules, written in the scheme document. Our page on the scheme information document covers that.

It employs the fund managers who decide what each scheme holds, which our page on the fund manager discusses.

It handles operations, from valuation to reporting to publishing the daily net asset value.

It charges a fee for all of this, taken from the scheme as part of the expense ratio.

This is the part worth understanding, because it is what makes the structure safe.

A mutual fund in India is set up as a trust. The scheme assets, meaning the shares and bonds it owns, are held by a custodian, which is a separate entity. The trustees oversee the AMC on behalf of investors.

So the AMC manages, but it does not keep. Your money is not on the AMC balance sheet, and it cannot be used to pay the AMC own debts. Our page on who regulates mutual funds explains where SEBI, the trustees and the custodian sit.

Not with the AMC either. With a registrar and transfer agent.

Two registrars handle most of the industry between them. They keep the record of who owns which units, process your transactions, and send your statements. Our page on the folio covers how your holding is recorded.

This is why you can get a single consolidated account statement covering every fund house you have invested with, which our page on the consolidated account statement explains.

It happens regularly, and it is far less dramatic than it sounds.

When an AMC is bought by another company, the schemes usually continue under new ownership, sometimes with a new name. Your units stay yours and your folio continues.

If schemes are merged as a result, unitholders are informed and given a window to exit without exit load. Our post on what happens when a fund is merged or renamed covers what to do when a letter like that arrives.

You do not need to do anything for your SIP to continue through a change of ownership. The mandate stays in place and instalments keep going into the same scheme, or into the scheme it was merged into.

The one thing worth checking after any such change is whether the scheme objective or the fund manager changed, because that is a real change while the new logo is not.

Less than the scheme itself, and more than nothing.

The scheme category, what it holds, its costs and its benchmark matter most, as our page on how to choose a mutual fund sets out.

What the AMC affects is process and stability: how consistent the investment approach is, whether fund managers stay, and how good the service is when you need a change made. Those are real, and they are hard to judge from an advertisement.

We do not recommend schemes or AMCs on this site, so you will not find a list here.

People mix these up constantly.

AMC is the company running the schemes.

AMFI is the industry body for mutual funds. It registers distributors and issues the ARN number, which is what our ARN-145870 refers to.

SEBI is the regulator, which makes the rules everybody has to follow.

Our post on checking whether somebody is registered explains how to verify an ARN before you hand anybody money.

Several dozen in India, and the number changes as new ones are licensed and older ones are bought or merged.

They range from subsidiaries of large banks and financial groups to smaller independent firms. Size alone, whether measured by assets or by the number of schemes, does not tell you much about how well a particular scheme is run, and a very large AMC can have both strong and weak schemes in the same category.

Every AMC publishes its full scheme list, fact sheets and portfolios on its own website, which our page on the fact sheet explains how to read.

Through the expense ratio, taken from the scheme rather than billed to you.

You never write a cheque to the AMC. The costs are deducted within the scheme, which is why the net asset value you see is already after expenses. Our page on expense ratio explains the mechanics and our page on mutual fund charges covers the full list.

Because it is invisible, it is easy to ignore, and over a long holding period it is one of the few things you can actually control.

• AMC = asset management company, the firm that runs the schemes.
• It manages, it does not hold. A custodian holds the assets under a trust.
• A registrar keeps the record of your units.
• If it is sold, your units continue and you are told about any merger.
• Judge the scheme first, the AMC second.

If you want help understanding what you already hold and who holds it, get in touch.