Asset Management Company
Also written AMC · Asset Management Company (AMC) · Fund house
The company that runs a mutual fund's schemes day to day — appointed by the sponsor or trustees with SEBI's approval, and paid a fee out of the scheme rather than a share of its profits.
In plain language
The mutual fund is a trust. A trust cannot hire dealers, negotiate with brokers or answer a call centre, so the work is contracted out to a company: the Asset Management Company.
The AMC is the part of the structure the investor actually meets. It employs the fund managers, runs the branches, builds the website, advertises the schemes, and deals with SEBI and the service providers. It is what people mean by "the fund house".
What it never becomes is the owner. The AMC manages the money; the unit-holders own it.
How it works
The AMC is appointed by the sponsor — or by the trustees, if the trust deed authorises them — with the approval of SEBI, and works under an investment management agreement executed by the trustees setting out its responsibilities. Prior approval of the trustees is needed before anyone is appointed to the AMC's board.
SEBI's conditions on the people run through the whole chapter. Directors must have adequate professional experience in finance and financial services. Neither directors nor key personnel may have been found guilty of moral turpitude, convicted of an economic offence, or of a violation of securities laws; nor may key personnel have worked at an AMC, mutual fund or intermediary during a period when its registration was suspended or cancelled by SEBI.
Inside, Chapter 3.3 splits the AMC into compliance (the compliance officer reports directly to the head of the AMC and reports non-compliance straight to the trustees), fund management (analysts, fund managers and dealers), operations and customer service (which houses the RTA relationship, the custody team, fund accounting and cash management) and sales and marketing.
And it can be sacked. The appointment of an AMC can be terminated by a majority of the trustees, or by 75 percent of the unit-holders — with any change subject to prior approval of SEBI and the unit-holders.
A worked example
An AMC runs a large-cap scheme with an AUM of Rs 4,200 crore and charges a total expense ratio of 1.65 percent.
Annual expenses charged to the scheme = 4,200 crore × 1.65% = Rs 69.30 crore
Out of that Rs 69.30 crore the AMC pays the registrar, the custodian, the scheme auditor, the distributors' trail commission and its own investment management fee. Suppose the scheme's portfolio returns 13.0 percent gross for the year. The investor's NAV grows at roughly 13.0 − 1.65 = 11.35 percent, because the expenses are deducted before the NAV is struck.
Now the portfolio loses 8 percent instead. The scheme's AUM falls to about Rs 3,864 crore and the investor is down — but the AMC is still paid its 1.65 percent on the assets it managed, roughly Rs 63.8 crore. That asymmetry is precisely why the workbook makes the trustees responsible for ensuring the fairness of the fees and expenses charged by the AMC, and why 75 percent of unit-holders can remove it.
Why NISM asks about it
Chapter 3.2.4 (Asset Management Company) and Chapter 3.3 (Organization Structure of an AMC) together are among the most heavily questioned parts of the paper. The Chapter 3 sample question — who handles the day-to-day management of the mutual fund — is answered by the AMC. Expect the majority of trustees or 75 percent of unit-holders termination rule, the requirement of a Unit Holder Protection Committee, and questions separating the AMC's roles from the trustees' (who appoint the custodian and the scheme auditor) and from the RTA's.
Common exam traps
- The AMC does not hold the scheme's assets. The custodian does, and the custodian is appointed by the trustees, not by the AMC.
- The AMC appoints the RTA and the collecting bankers; the trustees appoint the custodian and the scheme auditor. Questions swap these deliberately.
- The scheme auditor must be different from the AMC's auditor, and the scheme's accounts are kept independently of the AMC's.
- 75 percent of unit-holders can terminate the AMC — the same 75 percent that can resolve to wind up a scheme. A "majority" answer is only correct for the trustees.
- The fund accounting team is not the accounts team. The first calculates scheme NAV daily; the second handles the AMC's own finances.
Where this is taught
- Series V-A · Chapter 3: Legal Structure of Mutual Funds in Indiaintroduced here
- Series XXI-B · Chapter 6: Mutual Fundsintroduced here
- Series II-B · Chapter 9: Structure and Constituents of Mutual Fundsintroduced here
- Series X-A · Chapter 5: Introduction to Indian Financial Marketsintroduced here
- Series V-D · Chapter 3: Legal Structure of Mutual Funds in Indiaintroduced here
- Series V-B · Chapter 3: Legal Structure of mutual fundsintroduced here
- Series XXI-A · Chapter 6: Collective Investment Vehiclesintroduced here
- Series III-C · Chapter 14: SEBI (Mutual Fund) Regulations, 1996introduced here
Related terms
- Net Asset ValueThe net assets of a mutual fund scheme divided by the number of units outstanding — what one unit of the scheme is worth on a given day, after every liability except the unitholders' own.
- Registrar and Transfer AgentThe SEBI-registered agency that keeps the investor records of a mutual fund — processing purchases and redemptions, updating folios and unit capital, and issuing account statements.
- SponsorThe person or firm that sets up the mutual fund — applies to SEBI for registration, executes the trust deed in favour of the trustees, and puts up the capital of the AMC.
- Total Expense RatioThe all-in annual cost of a mutual fund scheme as a percentage of daily net assets — the base expense ratio plus brokerage, transaction cost and statutory levies — charged to the scheme, not billed to the investor.
- Trust deedThe registered instrument, executed by the sponsor in favour of the trustees, that constitutes a mutual fund as a trust, names its first trustees and governs its operations under clauses SEBI prescribes.
- TrusteesThe guardians of a mutual fund trust, who hold its property for the unitholders and oversee the AMC — at least two-thirds of them independent, each approved by SEBI in advance.
- Unit Holder Protection CommitteeA committee every AMC must constitute under the SEBI Mutual Fund Regulations, 2026, whose sole remit is the interests of unit holders across all the AMC's products and services.
- DealerThe AMC fund management sub-team responsible for placing orders with securities brokers on the instructions of the fund managers — the execution arm, not the decision-making one.
- Risk Management FrameworkSEBI's requirement that every AMC run risk management as an independent, specialised function, with dedicated risk officers for investment, compliance, operational and cyber security risk.
- Corporate Debt Market Development FundA close-ended Category I AIF, formed as a trust with a 15-year tenure, that buys investment-grade corporate bonds from debt mutual fund schemes when SEBI declares a market dislocation.
- Obligations of trusteesThe duties SEBI places on a mutual fund's trustees: hold scheme property in trust, review every AMC-associate transaction quarterly, and certify to SEBI half-yearly that nothing improper happened.
- Change in control of the AMCWhen ownership of a mutual fund's AMC changes hands, SEBI and the trustees must approve it first and every unit holder must be offered at least 30 calendar days to exit at NAV with no exit load.
- Norms for shareholding in mutual fundsA rule that stops one fund house owning a piece of another: no sponsor, associate or 10% shareholder of one AMC or trustee company may hold 10% or more of, or sit on the board of, another mutual fund's.
- Infrastructure debt fund schemesA mutual fund scheme that must put at least 90% of its assets into the debt of infrastructure companies, projects and SPVs, with a 30% cap on any single infrastructure borrower.
- Three-tier structureThe legal architecture of an Indian mutual fund: a sponsor that establishes it, a trust whose trustees hold the assets for unit holders, and an asset management company appointed to manage the money.
- Account AggregatorAn RBI-regulated NBFC that retrieves a customer's financial information from Financial Information Providers — including AMCs through their RTAs — and passes it on only with the customer's explicit electronic consent.
- Custodian independence testThe SEBI rule barring a custodian from serving a mutual fund if its sponsor or associates control 50% or more of the custodian's voting shares, or 50% or more of its directors.
- Mutual fundA trust registered with SEBI that pools money from many investors and invests it in securities on their behalf — not a different product from shares and bonds, but a different way of owning them.
- Fundamental attributesThe core features of a scheme — its investment objectives, policies and terms — on which investors relied when they invested. Changing them requires notice to every unit-holder and a no-load exit at NAV.
- Know Your DistributorAMFI's verification process for mutual fund distributors — document verification plus a biometric impression of the right index finger, traditionally at a CAMS Point of Service — completed before ARN registration.
- Ultimate Beneficial OwnerThe natural person who ultimately owns or controls a non-individual investor — over 25% of a company, over 15% of a partnership, or 15% or more of a trust's benefits — whose identity a mutual fund must verify.
- AMFIThe Association of Mutual Funds in India — the association of all registered AMCs, which registers distributors through the ARN and sets codes of conduct, but is neither a regulator nor a self-regulatory organisation.
- Unclaimed amountsDividend and redemption money a mutual fund investor never collected, held in a separate liquid plan — paid at prevailing NAV if claimed within 3 years, at the 3-year NAV if claimed later.
- AMFI Code of EthicsAMFI's code of good practice for AMCs and trustees, drawn up to supplement the SEBI code of conduct in the Fourth Schedule and set more explicit standards, from integrity to enforcement.
- Self-dealingUsing your position inside a fund house to transact with the fund itself on terms that benefit you unfairly, at the expense of the scheme and its unit holders — banned outright by the AMFI Code of Ethics.