SEBI

Best Mutual Fund Companies in India: How does an AMC Work?

In India, a significant group of people is switching from traditional investments to mutual funds. Gold, real estate, bank savings, and other conventional investment strategies are gradually losing popularity. Due to their capacity to produce larger returns when compared to more traditional ways of investment, like those stated above, mutual funds have attracted attention as a popular investment instrument.
The Securities and Exchange Board of India^[1] oversees and manages mutual funds in India (SEBI). In India, there are a lot of mutual fund companies. Depending on their investment objectives, clients can choose from a variety of programmes offered by these mutual fund houses.

Mutual Funds

In order to invest in shares, bonds, government securities, and money market instruments,  mutual fund companies pools and collects money from a number of individuals. Professional fund managers invest the money raised through mutual fund schemes in stocks, bonds, etc., in accordance with the investment goal of the scheme.

After deducting any necessary costs and fees, the income or profits from this collective investment scheme are allocated equally among the investors by figuring out the “Net Asset Value” of the scheme, or NAV. Mutual fund companies demand a small fee in exchange.

Best Mutual Fund Companies in India

Several kinds of mutual fund companies exist. Mutual fund companies can be divided into numerous categories, such as debt mutual funds, equity mutual funds, and hybrid funds, depending on their underlying assets, such as equities, debt, or gold. The risk profiles and investment goals of these funds vary.

So, not everyone should invest in the same mutual fund. The mutual fund or funds that are appropriate for a person will depend on his investment goals, risk tolerance, and time horizon. Some of the best mutual fund companies are discussed below:

SBI Mutual Fund 

SBI MF was set up on June 29, 1987, and was incorporated in February 1992. It was India’s second fund house after the Unit Trust of India. SBI manages assets via investment expertise in domestic mutual funds and even Alternate Investment Funds, offshore funds, etc. The user base of SBI Mutual Fund is more than 54 Lakhs. It offers schemes across various categories of funds to cater for the diverse requirements of individuals. 

ICICI Prudential Mutual Fund

In 1993, ICICI Prudential MF was founded. It is one of India’s oldest and biggest AMCs. It is a joint venture between Prudential Plc, a financial services provider with headquarters in the UK, and ICICI Bank. One of the largest asset management firms in the nation is ICICI Mutual Fund. The fund company provides a wide range of options for both corporate and individual investors. 

By providing satisfying product solutions and creative programmes, the fund house has been able to keep a solid customer base. The AMC has had significant scale expansion and a base of more than 1.9 million investors. The AMC offers various mutual fund schemes, including equity, debt, hybrid, ELSS, liquid, etc.

HDFC Mutual Fund

HDFC Mutual Fund is one of the top mutual fund houses in India. In 1999, it was founded. In August 2018, it commenced its service as a publicly listed company. With its high returns, HDFC Mutual Fund gained to become one of the most popular mutual investment options for investors. In 2000, the fund house introduced its first scheme, and since then, it has been showing satisfying growth. 

HDFC MF has established itself as one of India’s top performers over the years and gained the confidence of numerous investors. With 4.4 trillion in assets under management, the AMC is India’s largest mutual fund manager.

Aditya Birla Sun Life Mutual Fund

Aditya Birla MF was created in 1994 as a joint venture between Aditya Birla Capital Ltd. and Sun Life AMC Investments, a Canada-based financial service provider. Investors who want to see a decent return on their investments frequently consider it to be one of the best options. Solutions from Birla Sun Life Mutual Fund are available to assist investors in achieving financial success. 

The fund company specialises in a range of investing goals, including wealth creation, tax reduction, and personal savings. They provide a wide range of mutual fund schemes, including liquid funds, ELSS, hybrid funds, and equity funds. The AMC has always been renowned for its reliability. The BSL Mutual Fund’s schemes are available for inclusion in the portfolios of investors who desire to receive the best returns.

Kotak Mahindra Mutual Fund

Kotak AMC, which started operations in December 1998 and was the first AMC in India to offer a dedicated gilt fund for government securities, comes in at number five on our best mutual fund houses list in India. Being a wholly owned subsidiary of Kotak Mahindra Bank, it conducts business. Kotak Mutual Fund has developed into one of India’s well-known AMCs since its founding in 1998. 

To achieve the various needs of investors, the company provides a variety of mutual fund schemes. A few of the mutual fund categories include equity, debt, hybrid, liquid, ELSS, etc. With Kotak MF, around 7.5 million people have invested. An investor can plan their investments and refer to these top-performing plans of Kotak Mutual fund.

Nippon India Mutual Fund

Formerly known as Reliance Mutual Fund, Nippon AMC, on September 28, 2019, changed its name. With Nippon Life Insurance of Japan currently owning a 75% share in Nippon India Mutual Fund, it has grown to become the largest foreign-owned mutual fund institution in India. It signalled the exit of Anil Ambani’s Reliance Capital. Since 1995, the AMC has been registered with Sebi.

Nippon India has experienced one of the nation’s fastest rates of growth since its founding in 1995. The fund company has a remarkable history of steady returns. Nippon India Mutual Fund provides a range of plans to meet the various needs of investors. Investors can select funds based on their financial goals and take calculated risks.

Axis Mutual Fund

Axis AMC was Incorporated in October 2009. Over 75% of the AMC is owned by Axis Bank, with the remaining portion by Schroder Singapore Holdings Private Ltd. One of the most well-known mutual fund companies, it offers a variety of investing opportunities. Axis Mutual Fund offers approximately 53 distinct schemes in its product line-up. It is available in over 100 cities and has over 98 lakh active investor accounts.

DSP Mutual Fund

Prior to becoming DSP Mutual Fund, it was known as DSP Blackrock Mutual Fund. The partnership between DSP and BlackRock was established in 2008 and existed till 2018. In 1996, the business entered into a joint venture with Merrill Lynch Investment Managers before commencing a partnership with Blackrock. DSP Merrill Lynch Asset Management (India) Ltd. was its previous name. 

DSP BlackRock Mutual fund (DSPBR) is the largest listed AMC in the world. To meet the clients’ various investment demands, it provides various mutual fund schemes. It has a track record of competence in investment over more than two decades. The 150+-year-old DSP Group, which has had a significant impact on the development and professionalisation of capital markets and the money management industry, supports the AMC currently.

IDFC Mutual Fund

IDFC Mutual Fund is one of the leading mutual fund companies in India. It was started in the year 2000. The fund is marketed by IDFC Ltd., an Indian financial institution that offers to finance and consulting for infrastructure projects. The company has expanded over the years to serve the majority of the domestic market. 

It has regional headquarters located throughout the Central and Eastern regions of the nation, where economic growth is vital, and more investment possibilities are required. Many accolades and awards have been given to it by the regulatory agencies for mutual funds as well as by business leaders in the media and management.

L&T Mutual Fund 

The L&T Mutual Fund’s asset management company is L&T Investment Management Ltd. The business is a fully-owned subsidiary of publicly-listed NBFC L&T Financial Holdings Ltd. This fund house, which has 28 schemes to choose from, is sponsored by L&T Financial Services.

L&T Mutual Fund has a systematic approach to risk management and investing. Delivering exceptional long-term risk-adjusted performance is a priority for the organisation. Since its debut in 1997, the AMC has been tremendously trusted among its investors. It is possible to choose from a variety of schemes such as equity, debt, hybrid fund etc.

What is an Asset Management Company?

An organisation known as an asset management company manages investor funds in the best way possible and works to invest those funds in ventures with the highest likelihood of success. Every AMC operates under a mutual fund concept that a fund manager and staff oversee. By grouping its duties under the headings of market research and analysis, asset allocation, portfolio building, and performance evaluation, it separates its roles.

How does AMC work?

When you invest in an AMC, you are investing in a fund that the AMC manages. The returns of the funds are market-linked. Therefore, they are based on how well the fund has performed. A well-managed fund is likely to produce better high returns.

The fund would demand a small fee known as a fund management fee in return. It is AMC’s primary source of generating income. To maximise its subscriber base and, consequently, the revenue, a fund is expected to produce returns that are competitive in its category.

The market reputation of the asset management company is crucial when choosing a fund for investing. Investors have faith in funds managed by reputable and well-known AMCs.

Efficient Asset Allocation – To keep investors’ faith, an AMC must wisely allocate their funds across various investment instruments. The allocation of assets between debt and equity depends on the state of the market and expected interest rates. The professional knowledge and experience of fund managers are crucial for effectively allocating funds to various asset classes.

Research and Analysis – A lot of research and analysis of the performance of the asset classes goes into building the fund’s portfolio. Specialists conduct market, micro, and macro-economic analyses and communicate their findings to the fund manager, who makes investment choices on the fund’s goals.

Building an Investment Portfolio – The most important choice an AMC makes is to create an investment portfolio. To create a risk-adjusted portfolio that won’t underperform even amid market fluctuations, extensive amounts of study and analysis must be done. Fund managers build a portfolio by taking calculated risks while buying equities and investing in highly rated assets.

Performance Evaluation – AMCs must defend their investment choices in front of their investors and trustees. For this, a periodic evaluation of fund performance is carried out while taking fund returns, NAV Value, asset allocation, etc., into account. All AMC investors and trustees have access to this review sheet.

Conclusion

In conclusion, making investments in mutual fund companies can help you significantly increase your wealth and reach your financial objectives. Before investing, you must do thorough research on the fund and its management team and comprehend the costs and dangers related to mutual funds. To ensure that a mutual fund investment is in line with your overall financial strategy, you should also speak with a financial advisor. Also, you can diversify your portfolio and achieve larger returns with the aid of seasoned fund managers compared to investing in individual equities.

Also Read:
How to start a mutual fund company in India?
Mutual Funds – Different types of Mutual Funds in India