AMC SIP vs SIP

A systematic investment plan (SIP) is an investment strategy offered by mutual fund operators that allows you to invest in mutual fund schemes with fixed amounts at periodic intervals while AMC SIPs are managed by asset management companies (AMCs), where an investor can directly work and deal with an AMC rather than going through an intermediary.

So, while all SIPs from AMCs are considered SIPs, not all SIPs are specifically from AMCs.

In this article, we will understand what is an AMC SIP, the difference between AMC SIP vs. SIP, the features of both these investment strategies, and which is better—AMC SIP or SIP?

What is the meaning of AMC SIP?

An AMC SIP stands for an asset management company’s systematic investment plan. An AMC SIP allows an investor to directly invest in a mutual fund that an AMC is managing through an SIP. As a result, the investor does not have to deal with intermediaries and has a direct relationship with the AMC.

AMCs are fund houses that pool capital and resources from many individual investors and then invest those funds in different asset classes and securities to meet the investors' investment objectives. Investing via an AMC SIP is a good strategy for those who want to have a greater degree of control over their investments and also have a preference for managing their own accounts.

What is the meaning of SIP?

A systematic investment plan allows investors to build wealth in a disciplined manner. It promotes making regular investments of a pre-defined amount. These investments can either be weekly, monthly, quarterly, or yearly. Investors also have the option to enable auto-debit functionality, where withdrawals are automatically debited from inventors’ bank accounts and transferred to their pre-determined mutual fund schemes.

SIPs offer investors a flexible way of investing their money by adjusting their capital spending on the availability of their finances. This flexibility helps them gradually increase their SIP contribution to different mutual funds over time.

AMC SIP vs. SIP

Here are some of the parameters by which AMC SIPs differ from general SIPs.

Feature	AMC SIPs (Asset Management Company SIPs)	General SIPs
Definition	Systematic Investment Plans are offered directly by Asset Management Companies (AMCs).	Systematic Investment Plans that may be offered by various financial institutions, not necessarily AMCs.
Interaction	Investors engage directly with the AMC.	Investors may interact with brokers, financial advisors, or other intermediaries.
Fees	Generally, lower fees as there are no intermediary commissions.	May include additional fees or commissions charged by intermediaries.
Customisation	Customisable according to the AMC's offerings.	Customisation depends on the financial institution or platform providing the SIP.
Transparency	Direct access to information and updates from the AMC.	Information may be filtered through intermediaries, potentially reducing transparency.
Control	More control over the investment process and direct transactions.	Control is shared with or managed by intermediaries.
Convenience	May require more effort to manage multiple AMC SIPs.	Often more convenient to manage through a single platform or intermediary offering multiple SIPs.

Difference between AMC SIP vs. SIP with an example

Let us understand the difference between AMC SIP vs. SIP through a more practical day-to-day example:

Let us consider an investor named Rahul who wants to start investing via SIPs and has the financial objective of creating long-term wealth.

Now, let us understand how his investment will differ if he chooses to invest in either of these two types of SIPs.

AMC SIP

In the first scenario, Rahul decides to invest via an AMC SIP, for which he chooses an asset management company known as XYZ Ltd. He chooses a fund named Atlas Equity Fund and decides to set up Rs. 10,000 as an SIP directly with the XYZ Ltd. AMC.

The benefit that Rahul derives from this arrangement is that he will have direct control over his funds and potentially have to pay lower operational and management fees for his SIP investment.

SIP

In scenario two, Rahul decides to use the services of an online investment portal that allows him to invest in multiple mutual funds, including schemes from many AMCs. He selected a fund named Andes Equity Fund from a renowned mutual fund house.

The benefit that Rahul derives from opting for SIPs through an online portal is that he has access to multiple options, which gives him more choices. Although he might be charged an additional platform fee or commission, he gets the convenience of having all his different mutual funds on one platform.

Features of AMC SIP

Here are some of the features of an AMC SIP that make it a popular choice for many investors.

1. Real-time updates

AMC SIPs give their investors direct access to check the NAV or net asset value of the investment they have made in real time. As a result of this direct control, investors can easily view and track the performances of their investments whenever they want to.

2. Rupee cost averaging

Since AMC SIPs regularly invest money in buying units of a mutual fund, they benefit from rupee cost averaging. When a fixed amount of capital is invested every month, more units can be bought when the prices are low, and fewer units can be purchased when the prices are high. So, in the long run, this balances out, and the impact of ups and downs is the market gets nullified.

3. Flexibility

These SIPs offer investors a good amount of flexibility both in terms of the invested amount and also the frequency with which these investments are made. The investment amount can be easily changed depending on the income levels and the frequency of investment can also be increased or decreased to monthly, quarterly, or even twice a year.

4. Professional fund management

AMC SIPs come under the professional management of fund managers who regularly track their performances and take necessary actions based on market trends and conditions.

5. Develops an investment discipline

AMC SIPs promote the habit of regular investments to achieve the goal of wealth creation in the long term. Given their flexibility both in terms of amount and duration, AMC SIPs grow on the power of compounding and lead to substantial wealth accumulation over time.

6. Tax benefits

Equity investments in mutual funds are eligible for deductions as per Section 80C of the Income Tax Act.

Features of SIP

Systematic investment plans offer investors the opportunity to participate in the mutual fund markets with a flexible investment strategy.

1. Modest investment plan

SIPs offer you the option of investing in mutual funds with an amount as low as Rs. 500, in contrast to some investment avenues that require high lump-sum payments. Due to this, you can start investing with lesser amounts and eventually grow your portfolio as your income grows with time.

2. Consistent investment intervals

SIPs inculcate a disciplined habit of saving and investing regularly. They provide multiple timing intervals, ranging from weekly to quarterly, which takes advantage of rupee-cost averaging and helps build a substantial investment portfolio over time.

3. Fixed investment amount

When you initiate an SIP, the investment amount remains constant. Although you have the option to use the ‘SIP Top-up’ feature to increase your contributions, it’s important to remember that you cannot decrease the SIP amount without stopping the current plan and starting a new one.

4. Investment pause option

With SIP mutual funds, you always have the ability to put your monthly investment on hold whenever you face any financial emergencies. Once your pause period is over, you can easily resume your monthly SIP.

5. Adjustable SIP intervals

SIPs give you the comfort of changing your investment intervals depending on your choice between weekly, monthly, and quarterly payments. You only have to raise an online request for a change or write to your mutual fund provider.

6. No maximum investment limit

SIPs do not have any minimum requirement criteria. You can start investing in a scheme with as little as Rs. 500, and there is no cap on the upper limit. This ensures that investors can make consistent payments with the amount of money they are comfortable with.

7. Cancellation provision

Canceling an SIP is also a simple process and can be done online anytime by generating a cancellation request to the mutual fund provider. Another option to stop an SIP is removing the AMC from your bank account to cancel the SIP.

Which is better—AMC SIP or SIP?

Choosing between an AMC SIP and a general SIP depends on individual preferences and investment goals. AMC SIPs involve directly investing with a specific asset management company, often resulting in lower fees and more control over transactions. This direct interaction can offer greater transparency and possibly better customer service. However, the investment options are limited to the funds provided by that particular AMC.

On the other hand, general SIPs offered through platforms or intermediaries provide access to a wider range of mutual funds from various AMCs, enhancing diversification opportunities. These platforms often offer added convenience by allowing investors to manage multiple SIPs in one place, potentially at a higher cost due to platform fees or commissions.

Ultimately, if low fees and direct control are priorities, AMC SIPs may be better. Conversely, if broader investment options and convenience are more important, a general SIP might be the preferred choice.

Conclusion

Both AMC SIPs and general SIPs offer unique advantages depending on an investor's needs and goals.

If your financial goal is to achieve long-term appreciation of capital and create a disciplined habit of investing, AMC SIPs can become a great way to start this journey. They offer lower fees, greater control, rupee-cost averaging benefits, and a regular savings pattern to help navigate market fluctuations and build a significant corpus of wealth over time.

General SIPs, on the other hand, offer a broader range of investment options and convenience through various platforms, catering to those who value diversification and ease of management despite potentially higher costs.

For those looking to explore and compare various mutual fund options, the Bajaj Finserv Mutual Fund Platform can be an invaluable resource in making informed decisions, offering a seamless experience for both AMC SIPs and general SIPs.

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