Asset management companies (AMCs) invest pooled funds from clients into securities that match declared financial objectives, providing more diversification than individual investors. AMCs manage mutual funds, hedge funds, and pension plans, earning fees. They allow investors to access larger and more diverse portfolios with smaller minimum investments than purchasing securities individually. However, AMCs may lack the informational advantages of banks and removing assets from banks could reduce incentives for recovery and future loss avoidance.

1. ASSET MANAGEMENT
COMPANY (AMC)
BY
JINU TOMY

2. DEFINITION
 Asset management is a systematic process of
deploying, operating, maintaining, upgrading,
and disposing of assets cost-effectively.
 A company that invests its clients' pooled fund
into securities that match its declared financial
objectives.
 Asset management companies provide
investors with more diversification and investing
options than they would by themselves.

3. ABOUT AMC
• Mutual funds, hedge funds and pension plans are all run by
asset management companies. These companies earn
income by charging service fees to their clients.
• AMCs offer their clients more diversification because they
have a larger pool of resources than the individual investor.
• Pooling assets together and paying out proportional returns
allows investors to avoid minimum investment requirements
often required when purchasing securities on their own, as
well as the ability to invest in a larger set of securities with a
smaller investment.

4. ADVANTAGES
• Consolidation of scarce work out skills and resources
within one agency.
• Can help with the securitization of assets as it has a
larger pool of assets.
• Centralizes ownership of collateral, thus providing
(potentially) more leverage over debtors and more
effective management.
• Breaks links between banks and corporates and thus
could potentially improve the collectability of loans.

5. • Allows banks to focus on core business.
• Improves prospects for orderly sectoral restructuring
of economy.
• Allows the application of uniform workout practices.
• Can be given special powers to expedite loan
recovery and bank restructuring.

6. DISADVANTAGES
• Banks have informational advantages over AMCs as
they have collected information on their borrowers.
• Leaving loans in banks may provide better incentives for
recovery—and for avoiding future losses by improving
loan approval and monitoring procedures.
• Banks can provide additional financing which may be
necessary in the restructuring process.

7. • If assets transferred to the AMCs are not actively
managed, the existence of an AMC may lead to a
general deterioration of payment discipline and
further deterioration of asset values.
• It may be difficult to insulate a public agency
against political pressure especially if it carries large
portion of banking system assets

8. TOP ASSET MANAGEMENT COMPANIES IN
INDIA
• UTI Asset Management
• Birla Sun Life Asset Management
• Reliance Mutual Fund
• Tata Mutual Fund
• SBI Mutual Fund