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How to Invest in SIP A Beginner's Guide
In summary
An Asset Management Company, or AMC, manages mutual fund schemes on behalf of investors and operates within the regulatory framework prescribed by SEBI.
- AMCs manage pooled money according to each scheme’s investment objective.
- Fund managers make portfolio decisions within the scheme’s mandate.
- AMCs handle investment management, administration, disclosures, and investor servicing.
- Trustees provide oversight of the mutual fund and its operations.
- TER represents expenses charged to a mutual fund scheme.
- SEBI regulates the mutual fund industry and prescribes applicable requirements.
India’s mutual fund industry had AUM of Rs. 87.08 lakh crore as of 31 August 2026, showing the scale of assets managed through the industry.
What is an Asset Management Company?
An Asset Management Company (AMC) is an entity appointed to manage the investments and operations of a mutual fund in accordance with its investment objectives, applicable regulations, and governing documents.
When investors invest in a mutual fund scheme, their money is pooled with investments from other unitholders. The AMC manages this pool by investing it in securities permitted under the scheme.
For example, an equity fund may invest predominantly in shares, while a debt fund may invest in fixed-income securities. You can understand the broader classification through asset classes.
How does an AMC work?
An AMC performs several connected activities throughout the life of a mutual fund scheme.
Collecting and managing pooled investments
The AMC manages money collected from investors and allocates it according to the scheme's stated investment objective, asset-allocation limits, and applicable regulations.
The AMC does not have unrestricted discretion over investor money. Its investment decisions must remain within the scheme's mandate and regulatory framework.
Research and portfolio management
Fund managers and investment teams analyse securities, industries, economic conditions, and market developments before making portfolio decisions.
You can read more about the role of fund managers in making investment decisions for mutual fund schemes.
Administration and investor servicing
An AMC also oversees activities such as fund accounting, investor communication, regulatory reporting, and services related to transactions and redemptions.
For example, a folio number helps identify an investor's holdings with a particular mutual fund house.
What are the key functions of an AMC?
An AMC's responsibilities extend beyond selecting securities.
Investment management
The AMC manages investments in accordance with the scheme's stated objectives, investment strategy, and applicable restrictions.
Regulatory compliance
AMCs must comply with SEBI regulations and applicable circulars. The current SEBI (Mutual Funds) Regulations, 2026 came into force on 1 April 2026 and were last amended on 7 July 2026.
Disclosure and reporting
AMCs provide information required under applicable regulations, including scheme-related disclosures, portfolio information, expenses, and performance information.
Investor services
AMCs facilitate services relating to investments, redemptions, systematic investments, account records, and investor grievances through their authorised systems and service channels.
Who oversees an AMC?
The AMC operates within the broader mutual fund structure, which includes the sponsor, trustees, and AMC.
Trustees have responsibilities relating to oversight and protection of the interests of unitholders. SEBI's 2026 framework specifies responsibilities and obligations of trustees and the AMC within the mutual fund structure.
The AMC, meanwhile, undertakes the investment-management and operational functions assigned to it under the applicable regulatory framework and investment management arrangements.
This separation is important because the AMC is not the same entity as the trustee simply because both are involved in running a mutual fund.
What types of funds can an AMC manage?
An AMC can manage schemes covering different asset classes, investment strategies, and investor objectives, subject to the schemes it is authorised to operate.
Common mutual fund categories include:
- Equity funds: Primarily invest in equity and equity-related instruments.
- Debt funds: Primarily invest in fixed-income and money-market instruments.
- Hybrid funds: Combine equity and debt exposure according to the category's requirements.
- Solution-oriented schemes: Address specified long-term objectives under applicable scheme classifications.
- Index funds: Seek to track a specified market index rather than relying on active security selection.
- Exchange-traded funds: Generally seek to track an index or other specified underlying asset and trade on stock exchanges.
The exact portfolio composition depends on the scheme's mandate, rather than simply the AMC managing it.
How does an AMC manage a mutual fund portfolio?
Portfolio management generally involves several stages.
Research and analysis
Investment teams evaluate securities, issuers, sectors, market conditions, and relevant financial information.
Asset allocation
The fund manager allocates the scheme's assets according to its investment objective and permitted limits.
Security selection
Individual securities are selected based on the strategy of the scheme. In an actively managed fund, this involves investment decisions by the fund manager. In a passive fund, the portfolio generally seeks to replicate the relevant index.
Monitoring and rebalancing
The portfolio is monitored against its investment objective, applicable limits, and benchmark. Securities may be bought or sold when portfolio requirements or the investment strategy change.
The portfolio's value is reflected through its NAV, which represents the per-unit value of the scheme after accounting for its assets and liabilities.
What are the costs associated with an AMC?
The cost of operating a mutual fund is reflected through the scheme's applicable expenses, including its Total Expense Ratio (TER).
The Total Expense Ratio represents the recurring expenses charged to a mutual fund scheme, expressed as a percentage of its assets. These expenses can cover permitted costs associated with managing and operating the scheme.
TER should be compared with relevant schemes rather than viewed in isolation. A lower TER does not automatically indicate a more suitable fund because investors also need to consider the scheme's investment strategy, risk, portfolio, and performance.
How does an AMC generate revenue?
AMCs primarily receive compensation through the expenses charged to the schemes they manage, subject to applicable regulatory limits and disclosures.
The amount available to cover these expenses is linked to the assets managed and the applicable expense structure. An AMC's revenue should therefore not be confused with the investment returns earned by mutual fund investors.
Investors bear scheme expenses indirectly through the fund's NAV rather than typically paying the AMC a separate management bill.
How do you evaluate an AMC?
There is no single metric that establishes whether an AMC is suitable for an investor. You can consider several factors together.
Fund performance
Review the performance of individual schemes across appropriate periods and compare them with relevant benchmarks and peer schemes.
Investment consistency
Examine whether the AMC's schemes have followed their stated investment objectives and strategies consistently.
Costs
Compare the applicable TER of similar schemes. You can also consider whether the costs are reasonable relative to the scheme's strategy and category.
Risk management
Review portfolio concentration, asset allocation, credit exposure where relevant, and the scheme's SEBI Riskometer.
The Riskometer categories are Low, Low to Moderate, Moderate, Moderately High, High, and Very High. It is a scheme-level risk indicator and does not guarantee or predict returns.
Investor services and disclosures
Consider the availability of scheme information, investor communications, transaction facilities, and grievance-redressal mechanisms.
What is the role of an AMC in the Indian mutual fund industry?
AMCs are central to the functioning of the mutual fund industry because they provide the investment-management infrastructure through which pooled investor money is managed.
The scale of the industry has expanded considerably. AMFI reported total mutual fund AUM of Rs. 87.08 lakh crore and 28.35 crore folios as of 31 August 2026.
This growth does not mean every AMC or scheme has delivered the same results. Investors still need to evaluate individual schemes based on their objectives, risks, costs, portfolio, and investment horizon.
The Bajaj Broking website provides access to 4,000+ mutual fund schemes, subject to applicable terms. You can explore mutual funds and compare schemes based on the factors relevant to your investment requirements.
What should you check before investing in an AMC's scheme?
Before investing, focus on the scheme, rather than evaluating the AMC only as a corporate entity.
Consider:
- The scheme's investment objective and strategy.
- Asset allocation and portfolio composition.
- Historical performance against the appropriate benchmark.
- Applicable TER and other costs.
- The scheme's Riskometer.
- Fund manager and investment-team structure.
- Liquidity and exit-load conditions.
- Your investment horizon and ability to tolerate market fluctuations.
You can also use a mutual fund calculator from Bajaj Finance to create an estimate based on your investment assumptions. For recurring investments, an SIP can be used as an investment method, subject to the scheme's terms.
Conclusion
An Asset Management Company manages mutual fund schemes and performs investment, administrative, compliance, disclosure, and investor-servicing functions within the SEBI-regulated framework.
For investors, the AMC is only one part of the evaluation. The individual scheme's objective, portfolio, risk, costs, performance, and suitability for your investment horizon are equally important.
Last reviewed: September 2026
Mutual funds are subject to market risk. Please read the scheme-related documents carefully before investing.
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Frequently Asked Questions
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Can one AMC manage multiple mutual fund schemes?
Yes. An AMC can manage multiple schemes with different investment objectives, categories, and strategies, subject to regulatory approval and the applicable framework. Each scheme remains governed by its own investment objective, strategy, and disclosures.
Can an AMC change a mutual fund scheme's investment strategy?
A scheme must operate according to its stated investment objective and applicable regulatory requirements. Material changes to a scheme's fundamental attributes are subject to prescribed processes, disclosures, and investor rights rather than being made without regulatory or procedural requirements.
Does investing in a mutual fund make you a shareholder of the AMC?
No. Investing in a mutual fund gives you units in the relevant mutual fund scheme. It does not by itself give you ownership of the AMC that manages the scheme.
Does an AMC hold investors' mutual fund units in its own name?
The mutual fund scheme's assets are held for the benefit of its unitholders within the legal and regulatory structure of the mutual fund. The AMC manages the investments but does not become the beneficial owner of those assets merely because it manages the scheme.
Can two schemes managed by the same AMC have different Riskometers?
Yes. Risk is assessed at the scheme level. Two schemes managed by the same AMC can have different asset allocations, portfolios, strategies, and Riskometer classifications.
Should you choose a mutual fund based on the AMC's size?
AMC size alone does not establish whether a particular scheme is suitable. A scheme should be evaluated using its investment objective, portfolio, risk, costs, performance history, and other relevant factors rather than the AMC's AUM alone.
Disclaimer
Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319
BFL does NOT:
(i) provide investment advisory services in any manner or form.
(ii) carry customized/personalized suitability assessment.
(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.
In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.
Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.
Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.
Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.
Disclaimer
Bajaj Finance Limited ("BFL") is an NBFC offering loans, deposits and third-party wealth management products.
The information BFL 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.
This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.
Disclaimer
Mutual Fund SIP calculator may provide potential investors an approximate estimate on the maturity amount of the monthly SIP, purely based on mathematical calculation of the projected annual return rate selected by investor. However, such calculation does not factor the actual performance by the Asset Management Company (AMC) and should not be treated as any advice or assurance about the actual return of investment. Mutual Funds do not have a fixed rate of return and it is not possible to predict the rate of return. Please note that the SIP calculator are for illustrations only and do not represent actual returns which may vary depending on various factors including but not limited to actual performance, expense ratio, taxation, exit load (if any), etc.