Factors To Consider While Choosing An Amc For Your Investment Needs

Posted by Rudra Raghavan on September 23rd, 2019

Asset management companies, simply referred to as AMCs are special companies that manage funds that are collected from a wide range of investors. Such companies determine where, when and how to invest your funds. The decisions taken by asset management experts typically correspond to the investor’s financial goals and time-lines to achieve these goals. As such, asset managers invest in a diverse range of investment instruments including shares, equities, mutual funds, bonds, securities, money market instruments and so on. However, you need to consider a few facts before finalising an AMC to help you with your investment decisions. They are as under:

The reputation of the company: Fund management companies have to strive hard to build their market reputation. It takes anywhere between 5 to 10 years for an asset management or mutual fund company to earn its market reputation. A good asset management firm is one that has been providing consistently good performance during this period. When you begin considering such a company for your investment needs, you need to have more than one option. You need to compare various firms – check online reviews, speak to other clients and evaluate if the past performance is both good and consistent.

The business model followed by the company: Understanding the business model followed by asset management companies is just as important. You must pay special attention to the core business strategy of an AMC as it helps you analyse and evaluate the business model in depth. Also, check if your asset management firm’s primary business is wealth management or other financial services. A company who focuses on asset management solely is more likely to have a better business model that aligns with your objectives as opposed to one that offers miscellaneous financial services.

The reputation of the fund manager: Whether you wish to invest in mutual fund companies or wealth management companies, you need to ensure that your portfolio is entrusted in the hands of a good fund manager. You may have chosen a company to handle your investments, based on reviews and data but the reputation of the fund manager handling your portfolio is equally important. While no company will hire an inexperienced fund manager, since it can put them at a risk of losing customer; you need to be well-informed about the manager in charge of your investments. A simple internet search can help you find information about the funds managed by different fund managers in the past, and the outcomes of those investments. 

The level of service offered: Since asset management companies in India generally service clients with high net worth, they are expected to provide impeccable services. Typically, a single fund manager may be assigned to you, who you can contact at any given time, for your investment needs. But whether or not your advisor will be present when you need them depends on certain factors. As such, you need to check the number of clients being serviced by the same fund manager. You should also consider an AMC’s retention rates with regards to both, their advisors and clients. Understanding an AMC’s client service model structure can give you a good insight into the kind of service you can expect from the company and its advisors.

A good asset management company is one which provides investments advice after completing the necessary due diligence. Consider a company that provides detailed research reports and analysis of the different investment instruments; one that evaluates several factors including market and industry risks and your risk appetite. Such companies can help you attain your financial goals in a systematic, timely manner.