Working Mechanism of AMC.
The strength of AMC lies in its investment function which is a specialized function and depends upon the operational strategies of AMC’s and can be further divided into specialized categories. The investment department has a fund manager who is responsible for managing the funds and to decide about which, when and how much and at what rate securities are to be sold and bought. A research and planning cell performs a very sensitive and technical assignment. Then there is a dealer to execute the sale and purchase transactions in capital or money market. A dealer is to comply with all the formalities of sale and purchase through brokers.
Fund Manager: The fund manager manages the investment of the fund of the management company. A fund manager decides about which, when and how much and at what rate the securities are to be sold or bought.
Research and planning cell: The research is with respect to the securities and the prospective investors. The fund manager can make a huge contribution in this area.
Dealer: A dealer has deep understanding of the stock market operations. A dealer has to comply with all the formalities of sale and purchase through brokers.
Functions of AMC.
An asset management company performs the following functions:
- Establishes CII.
- Places CII securities, engages agents that place securities among the investors.
- Exercises management of CII assets, after the money has been transferred to the CII’s account, the AMC directs them to the purchase of assets with the aim to Create the portfolio with the structure of the given CII specified in its Investment Declaration.
- Specialists of its analytical department analyze the markets of securities, real estate and other assets, the instruments of which form a part of the CII’s assets.
- Specialists of its investment department are looking for new objects of investments.
- Specialists of its finance department perform daily revaluation of assets, draw up contracts on purchase and sale of assets, compile reports for government bodies that oversee and regulate the activities of AMC.
- Carries out routine activities of CII.