The assets of the Indian mutual fund industry have crossed ₹81 lakh crore as of January 31, 2026. But have you ever wondered who actually is in charge of these assets? The answer is Asset Management Companies. But what are they and how do they work? Let’s explore this article to understand the concept of an asset management company in depth.
What is an Asset Management Company
An asset management company (AMC) is a financial institution that collects money from investors and then invests the pooled capital across different asset classes.
When you invest in a mutual fund, you are not directly buying the securities. Instead, you are purchasing units of a scheme managed by an AMC. The AMC allocates the money according to the investment objective of the scheme.
AMC makes money through a fee called the Total Expense Ratio (TER). It is calculated as a percentage of the Assets Under Management (AUM) and supports research, compliance and operational expenses.
How an Asset Management Company works
An Asset Management Company follows a structured process to manage investor money efficiently. Let us understand this through a simple example.
- Pooling of Funds
Suppose there are 5,000 investors who want to invest ₹10,000 in the same mutual fund. AMC pools this money together and forms a corpus of ₹50 crore. This amount becomes a part of the total AUM of the fund. - Research and Analysis
The fund manager and research team of the AMC now study company earnings, its financial health, sectoral performance, interest rates, GDP and other macroeconomic factors. This helps in identifying potential investment opportunities. - Asset Allocation
After conducting the research, the AMC now decides how to allocate the funds based on the scheme’s objective. Out of the ₹50 crore, it may allocate ₹35 crore to large-cap stocks, ₹10 crore to mid-cap and the remaining ₹5 crore to debt instruments. - Portfolio Construction
After deciding on the asset classes, the AMC selects the companies it wants to invest in. For building the portfolio, it invests ₹20 crore in leading bank stocks, ₹15 crore in IT firms and splits the leftover amount between FMCG and energy sector stocks. - Monitoring and Rebalancing
Markets move with time. Suppose after 6 months, IT stocks start falling, but energy stocks are rising. The AMC will now reduce exposure to IT companies and increase allocation to the energy sector. This adjustment balances the portfolio and keeps it aligned with the fund’s objectives. - Processing Transactions
Let’s assume Naman was an investor in this mutual fund scheme, and after 2 years, he wants to redeem his units. In that time, his investment of ₹10,0000 has grown 12% per annum to ₹12,544. He places a withdrawal request, and the AMC processes this transaction and credits his bank account within the standard processing period.
Organisation Structure of AMC
An Asset Management Company functions within a defined framework that ensures accountability. It has the following structure:
- Sponsor
The person who individually or with others establishes the mutual fund and sets up the AMC is known as the sponsor. The sponsors must have an excellent history and reputation in business operations in order to meet strict licence requirements. - Trustees
The trustees oversee the operations of the mutual fund. They make sure to protect the interests of investors, run the mutual fund with ethics and ensure it is compliant with all the regulations. - Asset Management Company
The AMC manages the mutual fund scheme and makes investment decisions. It employs fund managers, research analysts, compliance officers and operational teams to carry out the day-to-day operations. - Custodian
Custodians are registered with the Securities and Exchange Board of India (SEBI), and their job is to safeguard the assets. They hold the securities bought by the mutual funds, and this separation enhances safety and prevents misuse of the assets. - Registrar and Transfer Agent (RTA)
The AMC appoints the RTA to manage the investor records, process applications, and manage transactions.
What are the functions of AMC?
An Asset Management Company performs multiple responsibilities:
- Investment Research
Before making an investment, AMCs conduct research to identify the opportunities. They evaluate the companies, sector and macroeconomic conditions to create a fund that matches the scheme’s objectives. - Fund Management
AMC appoints professional fund managers who are responsible for creating and managing the portfolio. They also work to maximise the returns while mitigating the risk using asset allocation and rebalancing. - Transparency
The AMCs are required to periodically disclose information regarding the funds’ composition, performance, expense ratio and more. It improves transparency and helps investors in making informed decisions. - Compliance
AMCs operate under a strict framework regulated by the SEBI. They have to adhere to the guidelines, follow ethical practices and protect the investors. - Processing Redemptions
AMCs also have the responsibility to process the redemption requests. When an investor wants to withdraw their units, AMC processes the transaction and credits the investor’s bank account within the regulated timeframe.
Types of Asset Management Companies
Asset Management Companies vary depending on their operational focus and client base.
Mutual Fund AMCs
This is the most common type of AMC in India. They pool, allocate and manage capital across different asset classes for investors.
For example, as of December 31, 2025, SBI Funds Management is the leading mutual fund AMC managing assets worth ₹12.41 lakh crore.
Private Equity
Private equity firms invest in unlisted companies. They help these companies grow and take an exit through private placements or public issues.
For example, ChrysCapital leads this segment in India. It raised $2.2 billion through its latest fund ChrysCapital X on November 5 2025.
Wealth Management Firms
They provide personalised investment solutions for high-net-worth individuals. It included financial planning, portfolio management and banking services.
For example, as of January 31, 2026, 360 ONE Asset Management Limited is one of the largest wealth management firms in India with an AUM of ₹18,394 crore.
Pension Fund Managers
They are professional fund managers who look after the investments of a particular pension fund’s subscribers.
For example, the SBI AMC is India’s largest pension fund manager. Under its subsidiary, SBI Pension Funds Private Limited (SBIPFPL), it manages assets worth ₹ 5.70 lakh crore as of January 30, 2026.
Different Types of Funds offered by AMC in India
In India, AMCs provide a broad spectrum of schemes:
| Fund Type | Meaning | Examples |
| Equity Funds | These funds invest primarily in shares of companies and aim for long term capital growth. They carry higher risk but offer higher return potential. | SBI Bluechip Fund, Mirae Asset Large Cap Fund |
| Debt Funds | These funds invest in fixed income instruments such as government securities and corporate bonds. They focus on stable income with relatively lower risk. | HDFC Corporate Bond Fund, SBI Magnum Gilt Fund |
| Hybrid Funds | These funds invest in a mix of equity and debt instruments to balance growth and stability. Risk level depends on equity allocation. | HDFC Hybrid Equity Fund, ICICI Prudential Balanced Advantage Fund |
| Sectoral Funds | These funds invest in a specific industry or sector such as banking or technology. They carry concentrated risk. | SBI Banking and Financial Services Fund, Tata Digital India Fund |
| Index Funds | These funds aim to replicate the performance of a specific market index. | UTI Nifty 50 Index Fund, HDFC BSE Sensex Fund |
Note: The mutual funds mentioned here are only examples, not investment advice or suggestions. Evaluate your risk profile and financial goals before investing.
Who Regulates the AMC
In India, AMCs are regulated by the SEBI, the apex body governing the securities market of India. It grants licences to AMCs, ensures compliance with the standard and enforces the disclosure norms.
Apart from SEBI, the activities of the Association of Mutual Funds in India (AMF) also have an impact on AMCs. It sets up standardised procedures and promotes ethical practices in mutual fund operations.
Regulatory oversight helps in protecting the investors and improves trust in the financial ecosystem.
Conclusion
An AMC turns the savings of investors into structured portfolios. Through professional management, research and regulatory supervision, they act as a link between investors and capital markets. Choosing the right AMC is the make-or-break factor behind the success of your investments.
FAQ‘s
AMCs in mutual funds refer to Asset Management Companies that collect money from investors and professionally manage it by investing in different securities according to the fund’s stated objective.
Asset managers research markets, build portfolios, manage risks, monitor performance and ensure regulatory compliance while working to generate returns aligned with investor goals.
AMCs manage pooled investor funds with decision-making authority, whereas brokerage firms mainly execute buy and sell orders.
The SEBI regulates AMCs in India by setting operational guidelines, enforcing disclosures and ensuring investor protection.
AMCs charge an expense ratio, which is a percentage of the fund’s total assets. It covers management costs and operational expenses.
