AMC SIP

AMC SIP, short for asset management company systematic investment plan, is a strategy where investors set up a systematic investment plan directly with a mutual fund's asset management company (AMC), bypassing intermediaries for direct engagement with the fund manager.
EXPLORE FUNDS
AMC SIP
EXPLORE FUNDS
3 min
19-September-2024
An integral component of investments today is a Systematic Investment Plan (SIP). An asset management company (AMC) pools resources from various investors to invest in mutual funds, while the SIP route allows for regular investments into mutual funds at fixed amounts.

This article will provide information on the meaning of AMC SIP, its features, and its benefits.

What is the meaning of an AMC SIP?

AMC SIPs allow you to invest in mutual funds through an AMC. Thus, it enables investors to take advantage of professional fund management while making SIP payments on specific dates, either via a standing instruction or direct debit. Let’s understand the nuances of AMC SIPs.

  • Asset Management Company (AMC): AMC is an organisation or fund house that pools money from investors and invests those funds in various asset classes.
  • Systematic Investment Plan (SIP): SIP allows you to invest a fixed sum regularly in a mutual fund and build wealth over time through consistent contributions.
  • Meaning of AMC SIP: An AMC offers the dual benefits of professional management with systematic investing, providing a disciplined way for mutual fund investments.

What are the features of AMC SIPs?

Direct access to NAV

Investors in an AMC SIP receive direct access to the fund's Net Asset Value. This way, a unit holder gets the opportunity to control their investments and track their performance. As a result, investors can make more informed decisions.

Rupee-cost averaging

An AMC SIP lets investors benefit from rupee-cost averaging. This implies that you invest the same amount of money at regular intervals over time. When the prices are lower (market slowdown), inventors acquire more units, and at higher prices, they purchase fewer units. This way, you won’t have to worry about market downturns when you are investing for the long haul.

Flexibility

AMC SIPs are designed to provide investment flexibility in terms of the amounts and time frames involved. Thus, it allows for investments to be made per month, quarter, or any other time frame the investor chooses as per their convenience.

Investment discipline

AMC SIPs are structured to instil investment discipline in investors. This is possible due to the habit of saving and investing regularly. Thus, you can amass a significant corpus by putting away a certain amount every month.

Tax benefits

Certain equity and balanced mutual funds and other schemes offer tax benefits when invested through AMC SIPs. These SIPs qualify for tax benefits u/s 80C of the Indian ITA.

Professional fund management

The key advantage of this investment route is professional fund management. This implies that experienced fund managers make investment decisions instead of people who have little to no knowledge of financial markets.

What are the benefits of AMC SIPs?

There are various benefits to investing in AMC SIPs. Let’s take a look at some of them:

Accessibility

AMC SIPs can be accessed by all types of investors and with low minimum investment requirements. Thus, they allow even a small investor to invest in the financial markets.

Wealth creation

AMC SIPs, when done with consistency and discipline, can harness wealth creation and provide financial independence. You can also benefit from the power of compounding, where your investments grow multifold over time.

Diversification

AMC SIPs enable investors to spread their investments across asset classes and securities, making them less risky, while increasing the potential for higher returns.

Convenience and hassle-free setup

The AMC SIP setup is quick and hassle-free. An SIP can be started online or offline, ensuring hassle-free investing.

Goal-oriented investing

AMC SIPs can be linked to different financial goals like buying a house, funding higher education, or retirement planning.

Also read: AMC SIP Vs SIP

Conclusion

Investing in AMC SIPs offers several benefits and provides a good mix between professional fund management and systematic investing. Some of the benefits include direct access to NAV, rupee cost averaging, flexibility in the way funds are invested and managed, using long-term investment discipline, and professional management. Furthermore, AMC SIPs are an excellent option for investors seeking a diversified portfolio.

If you wish to kick-start your investment journey, the Bajaj Finserv Platform is the ideal destination. You can compare 1000+ mutual fund schemes from top fund houses and invest in mutual funds that align with your goals. Moreover, you can use tools such as lump sum calculators and SIP calculators to select mutual fund schemes that offer higher returns.

Frequently asked questions

What is AMC SIP vs SIP?
SIPs offered by an Asset Management Company (AMC) are called AMC SIPs. AMCs provide direct access to NAVs with professional fund management. An SIP allows you to invest a fixed amount at regular intervals. Even though both target systematic investing, SIPs can be set up using platforms, brokers, or directly through fund companies.

What is AMC in mutual fund SIP?
An AMC in mutual fund SIPs manages all investments made by investors. The AMC hires fund managers to make investment calls in order to meet the fund's objectives. They do the administrative work to make sure that the assets are diversified and managed properly.

How can I stop AMC SIP?
  • Sign in to your mutual fund account from the AMC website /app
  • Go to the SIP section and scroll down, where you will locate the ‘SIP’ option
  • Choose the option to halt or discontinue SIP
  • Confirm your decision
Alternatively, you may talk to customer care of the AMC or even visit a branch and stop the SIPs.

How do I pay my AMC SIP?
For AMC SIP, payments are typically made via automated electronic transfers from the registered bank account. For this, you will have to create an Electronic Clearing Service (ECS) or National Automated Clearing House (NACH) mandate, where the AMC can directly deduct the SIP amount on the specified dates from your banking account.

What happens if I don't pay AMC SIP?
If you don't pay the SIPs, the AMC SIP will either be stalled or stopped as per any specific policy of that particular period. Repeatedly defaulting in payment will lead to termination. It is crucial that you have enough funds in your bank account on the SIP due dates.

How do I withdraw money from AMC SIP?
If you want to withdraw money from an AMC SIP, you can:

  • Access your mutual fund account on AMC website or mobile app
  • Go over to the redeem section
  • Click on the SIP/ YFIP or individual units to redeem
  • Follow the steps to finish redeeming your units
Moreover, the redeemed amount will be credited to your bank account linked to your account.

How to convert AMC SIP to normal SIP?
Normally, to convert an AMC SIP to normal SIP means stopping the current AMC SIP and starting a new SIP through a MF distributor or various other platforms. Here’s how you can do it:

  • The AMC SIP can be stopped by logging in to your mutual fund account and discontinuing the current SIP
  • Select a mutual fund platform or distributor
  • Go through the steps of starting a fresh SIP and select your investment amount, mutual fund scheme, and the payment frequency.
Is AMC SIP good?
An AMC SIP is particularly helpful from the perspective of professional fund management, as it provides direct access to NAV, potentially lower expense ratios, and convenience in terms of systematic investing options. Investors get to profit from the knowledge and expertise of fund managers, combined with a disciplined approach towards investing, helping them fulfil their financial objectives.

What will happen if I delete my AMC SIP?
Once your AMC SIP is deleted, the subsequent instalments stop. Your SIP in that mutual fund stands cancelled. However, previously bought units in your account will earn returns as per the fund’s performance. You may redeem those units as and when you desire or allow them to grow over time.

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The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.

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