What is an Asset Management Company (AMC)?

Summary: An Asset Management Company is a financial firm that invests pooled money from clients in various assets to increase revenue. Direct market access offers access to financial market exchanges to increase trading profitability.

An Asset Management Company (AMC) is a financial institution that manages investments of clients who can be individuals, businesses, or institutions. An AMC generates profits by pooling money from clients and investing it in assets such as stocks, bonds, and real estate. They work to produce maximum returns at minimum risk for their clients. Asset management companies in India charge fees for their services based on a percentage of assets under management.

How Do Asset Management Companies Function?

Investment professionals at an AMC work to analyze market trends, research individual investments, and build profitable portfolios, keeping in mind client-specific objectives and risk tolerance.

Here are the steps that an AMC takes:

1. Allocation of Assets - An AMC carefully considers the various equity and debt instruments before allocating assets to maintain the investor’s trust and confidence. The fund manager has the responsibility of buying or selling funds and allocating the pooled funds to various asset classes.
2. Research and Portfolio Building - Significant time and investment is required to thoroughly research the market and create a portfolio depending on the present market conditions and economic factors. The Fund Manager and the analytical team analyze the market to create a balanced portfolio that can perform during unfavorable times. A major factor taken into consideration is the risk factors of each asset before creating a portfolio.
3. Performance Review – This step is crucial as the AMC is accountable to its clients for their investments and performance. To maintain a good reputation and to prevent investor criticism, the AMC is to carefully the performance of the funds using account factors such as NAV, fund returns, etc.

Among the many asset management companies in India, choose one that has a good track record and performance and is up to date with fluctuating market trends.

What Is Direct Market Access (DMA)?

Direct market access (DMA) is the access one has to electronic facilities and an electronic list of buy and sell orders of financial market exchanges that support daily securities transactions. DMA, owned by sell-side firms, requires sophisticated technology infrastructure. Buy-side firms such as hedge funds, mutual funds, pension funds, and private equity funds invest in a DMA broker to place orders at lower costs than to rely on market-making firms and broker-dealers. It establishes a direct connection to the financial market exchanges that make the final financial market transaction.

What are the Benefits of Direct Market Access?

A trader who has invested in a DMA broker has full transparency and direct access to the order book of an exchange and its orders. The DMA platforms are integrated using sophisticated algorithmic trading strategies that streamline the trading process to increase efficiency and cost savings. The order execution is very fast, allowing the traders to take better advantage of very short-lived trading opportunities.

Neha Jaiswal is an experienced finance content writer who specializes in topics related to trading and investments.