Asset Management Company (AMC) is an institution that manages and invests our money on our behalf. AMCs run various schemes and appoint fund managers for each scheme.
For example, Nippon India Mutual Fund is an AMC, and they have various schemes like Nippon India Large-Cap Fund, Nippon India Small-Cap Fund, Nippon India Growth Fund, etc. Each of these funds has different fund managers.
In order to protect investors' interests, the Securities and Exchange Board of India (SEBI) has established a multi-tier structure for AMCs. Let’s understand the structure in more detail.
As you can see, first in the structure is the fund sponsor. The fund sponsor is a corporate entity willing to set up an AMC. You can think of them as the promoters of the AMC. They are the ones who approach the SEBI for a license to set up an AMC.
Once SEBI grants permission to set up an AMC, the sponsor must appoint a board of trustees. The trustees are responsible for ensuring that the AMC acts in the best interests of investors and is transparent in its operations.
The board of trustees and the fund sponsor jointly appoint the AMC. The AMC has fund managers along with Chief Investment Officer (CIO), analysts, and other people who are responsible for complete management. They are responsible for launching and managing the schemes.
The AMC now appoints a custodian. The custodian is the one who holds all the shares and securities bought by the AMC. They are the ones who safeguard the assets of the mutual fund scheme.
The AMC then appoints Register and Transfer Agents (RTAs). Their job is to allot folio numbers, transfer units, update personal details, etc. Examples of RTAs are CAMS and Karvy.
Now that you know the structure of an AMC, let’s discuss one crucial document issued by the AMC before concluding this article.
Each mutual fund house provides a fact sheet. Fund houses generally release the fact sheet on a monthly basis. The factsheet provides all the general information on the fund – its philosophy and objective, available options (growth or dividend), available plans (regular and direct), Net Asset Value (NAV) of each plan, minimum investment amount, and AUM data. The fact sheet can be used to know everything related to the mutual fund.
The SEBI has introduced a multi-tire structure for Asset Management Company to safeguard investors' interests. First up in the structure is a fund sponsor who appoints a trustee and then they both appoint an AMC who in turn appoints a custodian and RTAs.
Factsheet is a document issued by an AMC which contains details of all the funds. You can find all the data related to the fund like the fund’s AUM, NAV, philosophy and objective, available plans, etc. in the factsheet. You can find this document on AMC’s website. You can also request a copy of the same by mail.