What is Mutual Fund?

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective.

The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds).

Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).

How it Works?

A mutual fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. For an individual investor, having a diversified portfolio is difficult. Mutual funds helps the individual investors to invest in equity and debt securities simultaneously. When investors invest a particular amount in mutual funds, he becomes the unit holder of corresponding units. In turn, mutual funds invest unit holders’ money in stocks, bonds or other securities that earn interest or dividend. This money is distributed to the unit holders. If the fund gets money by selling some stocks at higher price the unit holders are liable to get the capital gains.

Advantages of Mutual Fund


Buying a mutual fund is easy! The minimum investment is also very small. As little as Rs. 500 can be invested on a monthly basis. Just contact us to know more.

Economies of Scale

Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.


By owning "shares"(known as "units") in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you.

Professional Management

The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor the investments.

Asset Management Company (AMC)

Axis Mutual Funds
Kotak Mutual Funds
Nippon India Mutual Funds
HDFC Mutual Funds
SBI Mutual Funds
ICICI Prudential Mutual Funds
Aditya Birla Sunlife Mutual Funds
UTI Mutual Funds
Franklin Templeton Mutual Funds
IDFC Mutual Funds
DSP Mutual Funds
Tata Mutual Funds
L&T Mutual Funds
PGIM India Mutual Funds
Sundaram Mutual Funds
Invesco Mutual Funds
LIC Mutual Funds
JM Financial Mutual Funds
Baroda Mutual Funds
Canara Robeco Mutual Funds
HSBC Mutual Funds
IDBI Mutual Funds
Indiabulls Mutual Funds
Motilal Oswal Mutual Funds
BNP Paribas Mutual Funds
Mirae Asset Mutual Funds
Principal Mutual Funds
BOI AXA Mutual Funds
Union Mutual Funds
Taurus Mutual Funds
Edelweiss Mutual Funds
Navi Mutual Funds
Mahindra Manulife Mutual Funds
Quantum Mutual Funds
PPFAS Mutual Funds
IIFL Mutual Funds
Quant Mutual Funds
Shriram Mutual Funds
Sahara Mutual Funds
ITI Mutual Funds

Asset Management Company collects investments from a different investor, make a pool of funds collects and invest in a diversified portfolio across Equity, Debt and Risk-Free Instruments.

What is an Asset Management Company?

An Asset Management Company (AMC) is a firm that invests the funds pooled from individual investors in securities with the objective of optimal return for investors in exchange for a fee. AMC maintains the diversity of portfolio by investing in both high-risk and low-risk securities such as stock, debt, real- estate, shares, bonds, pension funds, etc.

Factors such as industry risk, market risk, return risk, political risk are considered before selecting any security to meet the return on investment targets. For example, a debt fund invests in bonds and risk-free Government bonds to maintain the minimum risk. On the other side, an equity-oriented fund will invest in shares and stocks with high risk and high return.

How are the funds managed by an AMC?

Basically, when you invest with an AMC, you invest in a portfolio that AMC maintains for you. It is the responsibility of AMC to ensure an investor’s financial objective is met.AMC ensures this by the following means:

1. Market Research and Analysis

To build a portfolio for an investor the asset manager needs to do a lot of research on the market trends, macro-economic and micro-economic factors, political aspects. On the basis of this research, the appropriate securities are selected which will outperform the return expectations of the investors.

2. Asset Allocation

On the basis of market research and investor’s financial objective, the asset manager allocates the funds to different assets. For example, a debt-oriented would invest just 20% in equity-oriented funds to keep the risk levels low. However, an equity-oriented fund would invest more than 70% in equity and rest in debt. A balanced fund would end up with just 60% in equity and 40% in debt to balance out return and risk.

3. Creating a Portfolio

After research and analysis by analyst and decision of asset allocation are done, the asset manager on the basis of market findings creates a portfolio. Here the asset manager will take decisions like which security to sell, buy or hold for a period. The entire creation of portfolio is solely based on the market expertise of professionals, research and study and investment goals of the investor.

4. Review of Performance

Since the fund of an investor is at stake, the performance measurement of the portfolio becomes very important. At every point, the asset manager has to justify a buy, sell or hold securities to investors and trustees. Every asset manager generally provide regular updates investor regarding sales, repurchases, NAV, Return on risk, portfolio changes and factors which might affect their portfolio.


How do Asset Management Company functions?

Let us see how an Asset Management Company functions:

An AMC collects funds from different investors having different financial objectives. Now it invests such a large pool of funds in a very diversified portfolio and enjoys economies of scale, getting discounts on purchases. The return earned by the portfolio is then distributed among all the small retail investors.

The services provided by an AMC is charged either on a fixed basis or commission-based. Fixed Fee is nothing but a monthly or quarterly amount for maintaining the fund.

Points to consider before you choose an AMC:

a. Every AMC follows the investment objective of the schemes before investing and you must check on the track record and performance history of the investment schemes in the past during the ups and downs of the market.

b. It is very important to know your AMC well before you invest your hard-earned money.

c. While selecting a fund house ensure that the below parameters met.

d. The reputation of an AMC- Reputation is built by consistency in performance over a few years say 5 years or 10 years. The investor must go through the performance through annual reports of schemes and AMC, reviews prevalent in the market and compliance report to SEBI, AMFI, and RBI.

e. Fund Manager’s credibility- AMC work in parallel to its fund manager. The performance of the fund manager is now the performance of AMC then. Hence, an investor must look for the past performance of the fund manager w.r.t managing the assets and funds.

f .Price and Value- Before selecting any fund, an investor must consider looking at the price of the fund and the value creation and return that the fund offer.

g .Fees and commission- Few AMCs charges a fixed fee for their services while others charge a commission on the return earned on the fund. A fixed is considered over commission because an investor will always know the outflow amount beforehand.

Bodies Governing AMC’s Operations

AMC performs under the supervision of the board of trustees. All the Asset Management Companies are governed by SEBI and AMFI.

Securities and Exchange Board of India (SEBI) is the Indian Capital Market Regulator which governs and controls every AMC in India.

The Association of Mutual Funds in India (AMFI) is a statutory body formed by mutual fund companies. AMFI was formed with the vision of a transparent and ethic driven financial industry. Every AMC must comply with the regulations led by AMFI.

Banks being sponsors are governed by RBI as well along with SEBI and AMFI.

Lastly, all the regulatory bodies SEBI, AMFI, and RBI are governed by RBI.

Guidelines laid by SEBI, AMFI, and RBI for an AMC

Some of the mandatory practices and guidelines laid down by SEBI, AMFI, and RBI for a mutual fund company to follow:

The Chairman of an AMC cannot hold the position of Trustee of any mutual fund.

Key personnel of every AMC should not have indulged or convicted for any fraudulent or offensive acts.

AMC should not act as a Trustee of a mutual fund.

The net worth of an AMC must be not less than Rs. 10 crores.

Before making an investment in any of its schemes the company must disclose its intention to invest in the offer documents.

A quarterly report on activities and compliance of regulations must be submitted to the trustees.

Reliability of AMC compared to Banks

We often have the notion that mutual fund companies are not as reliable as Banks and the schemes offered by AMC is not as secure as a Fixed Deposit Interest. The fact is every mutual fund company or AMC is governed by RBI and the Ministry of Finance just like any Bank. Hence, it is safe to invest with a Mutual fund company or AMC.

An AMC is appointed by the sponsor and trustee to manage the pool of funds. AMC acts under the supervision of trustees who are governed by SEBI and AMFI. This ensures transparency, accountability, and objectivity. Hence one must go ahead and invest to optimize their wealth and save their taxes.

Mutual Funds – What is Mutual Fund? Basics, Types & Benefits - Invest in Top Mutual Funds Online

How to Invest in an Equity Mutual Fund with Regnum Digital?

Any investor can enjoy the benefits of investing through Regnum Digital in the following easy steps

Create an account in Regnum Digital by providing your basic KYC details. (If you already have an account then just login into your account)

On your Dashboard Clieck on Invest online.Select the category and choose the funds you want to purchase. If you already know the name of the fund to buy, then you can search the particular fund through Quick Order.

Select the category and choose the funds you want to purchase.

If you already know the name of the fund to buy, then you can search the particular fund.

Select Transaction mode and confirm. You can place up to 10 orders in one go.

You can make payment through your registered account through UPI, Direct Pay, NEFT/ RTGS, Bank Mandate, or Cheque. For same-day NAV, select UPI, Direct Pay, or NEFT / RTGS as other payment options may take a few days to clear, Nodal account takes about 1-2 days to clear payment from the approved mandate and cheque takes about 2-5 days in clearing due to which you will not get the same-day NAV.

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