Wealth creation and financial portfolio building are no longer limited to the richer section. People belonging to the middle economic classes are now focusing on increasing their financial prudence. Diversification of investment channels in countries like India has further fueled this development. You can now make smart choices by investing in mutual funds or equity shares for profitable growth.
Although this sounds tempting, managing multiple assets can be tedious and overwhelming, especially for beginners.
Truth be told, improper management routines will only lead to a chaotic financial profile. It’s primarily because of the lack of expertise and transparency of the security holdings. That’s why it’s better to opt for a smarter option to grow wealth. This is where an asset management company comes into the picture! It plays a pivotal role in assisting investors in making intelligent calls and building a robust wealth portfolio.
What is an Asset Management Company? Let’s Check out..
The global financial market is highly volatile. If you are not an investment expert, growing your wealth would be extremely difficult. Identifying which fund or equity share can return maximum dividends in the next 5 years is not something you can expect from a beginner. This is why you need assistance from an expert asset management company.
It creates investment pools where funds from various clients are deposited together. The total securities are then invested further in different assets. Mutual funds, equity shares, stocks, bonds, real estate, and other such instruments are usually preferred. Risk parameters involved are agreed upon between all the parties beforehand to prevent any friction later on.
Consolidated asset management drives maximum returns on the initial valuation. In other words, individuals can make the most out of a volatile market with minimal risks.
In the Indian landscape, all asset management companies need to adhere to the SEBI guidelines. That’s how they ensure:
- Accountability
- Transparency
- Optimal Investment Protection
How Can You Leverage AMC Services for Your Financial Growth?
1. Professional Fund Management
Individual investors usually struggle with minimizing the risks and maximizing the profits simultaneously. This struggle can be easily eliminated with the help of a professional asset management company. These firms employ experienced managers who leverage different weapons to make informed decisions. Data-driven strategies, financial models, and market research are a few to name.
2. Portfolio Diversification
AMCs don’t stick to a single form of investment channel. Rather, they will distribute your funds across multiple instruments or assets, like bonds, mutual funds, shares, and so on. This will ensure a proper balance in the overall return percentage even if one specific instrument fails to perform well. Building such a diversified and risk-proof portfolio is quite difficult for individuals.
3. Low Entry Barrier
One of the biggest worries most beginners have is dealing with a huge upfront investment sum. However, an asset management company will eliminate this aspect by allowing you to begin your journey with an amount as low as INR 500. So, you don’t need to have a lump sum amount in your bank account to proceed with investments.
To top it all, such a system allows easy entry to homemakers, students, freelancers, and other categories of people who cannot afford heavy costs.
4. Tailored Options
The financial goals will vary from one person to another. For instance, you may look forward to maximizing your returns through short-term investments while your partner prefers the risk-free long-term plans. Partnering with an AMC will give you the advantage of investing in a tailored financial model. Their experts will design a plan that will suit your future investment goals while maximizing the returns.
5. Regulatory and Compliance Oversight
Every asset management company abides by the stringent regulations stated in SEBI guidelines. This is how they ensure maximum transparency for all individuals. In addition, regular disclosures and detailed statements offer investors the confidence that their money is managed ethically and efficiently.
6. Liquidity and Flexibility
With the AMCs, you won’t have to worry about accessing your investments when needed. In other words, you can quickly redeem your deposits, thanks to the high liquidity these firms offer. There won’t be any lock-in period or delays in the encashment.
7. Digital Convenience
Most AMCs have their mobile apps, thereby allowing investors to enjoy financial digitization. You can easily track and manage your funds within a few clicks. Whether it’s to check the unit or share price or track an asset’s performance, these apps will make work much easier for you.
8. Tax Benefits
Lastly, AMCs offer different investment instruments that will help you save taxes annually. For example, ELSS is one of the most popular tax-saving funds in India. Also, equity funds offer better tax benefits, allowing investors to maximize the long-term capital gains.
Investment Options Offered by an AMC in India
As we already stated that an asset management company will invest your funds in different instruments. So, let’s have a look at the options you will have.
- Equity Funds: Investments will be made in company shares according to the per unit value. Although these carry higher risks, the long-term capital gains are truly commendable.
- Debt Funds: If you want to avoid risks, these will be the perfect option to invest in. These are fixed-income securities, usually managed by government bodies. Corporate bonds, treasury bills, and debt mutual funds are a few examples.
- Hybrid Funds: These will offer a perfect balance of capital gains and risks by combining both debt and equity funds in a proper ratio.
- Index Funds and ETFs: Known to be cost-efficient, these funds track a specific market index from time to time. Sensex and Nifty 50 are the two most popular indices used for tracking the market performance.
- Thematic and Sectoral Funds: If you want to invest in a specific growth theme, go for these funds. Here, your money will be deposited in certain sectors only, like IT, pharma, education, and so on.
Equity Linked Savings Scheme: According to the Indian financial landscape, ELSS offers tax benefits under the 80C scheme.
How to Choose the Right AMC for Your Financial Planning?
With countless options, collaborating with the best asset management company in India can be difficult. Having said that, let’s explore the factors you should assess before making the call.
- Shortlist AMCs with a credible and consistent history of managing diverse asset portfolios in our country. Check if they have maintained an incredible growth profile across different market cycles or not.
- Any reliable and popular AMC will always offer diverse investment options to its customers. This is to help create a personalized financial plan and cater to specific goals, risk tolerance levels, and timelines.
- Ensure the AMC has reputed and skilled fund managers. These professionals will play a crucial role in minimizing the market risks while giving greater returns.
- Look for companies offering competitive expense ratios. It will help you get maximum returns on long-term investments.
- Always choose a company that abides by the stringent regulations proposed by SEBI. Transparent reporting, regular disclosures, and complete fund visibility are the keys to evaluation.
Conclusion
Investing through an asset management company is indeed a smart decision, given the increasing market volatility. Not only can you reap the benefits of diversification, but also gain a low-barrier entry into the market. But it’s only possible if you find a reliable partner. This is where Wealth First Portfolio Managers Limited stands out, offering personalized asset management strategies to our customers. Explore our services now to know what options you have to grow your wealth.