AMC SIP or Asset Management Company Systematic Investment Plan allows investors to invest directly in the AMCs with the facility of SIP. It differs from regular SIP due to its structure, where there is no intermediary between the AMC and the investor. Consequently, the cost of operations and maintenance is also eliminated in the process.
Usually, investors may confuse it with direct plans in mutual funds. However, AMC SIPs can offer two options, regular and direct plans, for investment. Explore in detail what is AMC SIP, its features and its benefits.
What is AMC SIP in Mutual Funds?
When an investor invests in mutual funds with a SIP facility directly from the AMC website or office, it is known as AMC SIP. Intermediaries like mutual fund distributors or brokers are eliminated in the process. The AMCs directly pool the funds and manage them on behalf of investors. Here, the expense ratio is expected to be lower than other plans.
SIPs are a feasible plan for retailers to avoid the burden of lump sum payments. Moreover, they can average and reduce the total cost over the investment period. Investing in AMC SIP can help investors diversify their investment opportunities. It allows better transparency and control for the investors. However, it may also increase their efforts.
Features of AMC SIP
- Better access: These investment plans allow direct connection with the AMCs. These days, AMCs have their mobile app and websites to help with an easy investment process. Moreover, the SIPs can be an affordable alternative for establishing this access.
- Cost averaging: Investment costs can be averaged out in the long term. This encourages investors to build wealth with long-term market investments.
- Fees: Due to the elimination of intermediaries, the cost of investment can be lower, and investors have the opportunity to invest in other opportunities. Moreover, investors get the benefit of higher control over their investment due to this feature.
- Real-time NAV: Due to a direct connection with AMC, one can get a constant update of the Net Asset Value (NAV) of a scheme. It can help investors make better investment decisions.
- Consistent investment: SIPs can be a potential option for regular investments and can help discipline the investments.
- More efforts: Due to the absence of intermediaries like mutual fund distributors, one needs to put more effort into selecting a suitable scheme and navigating through the investment process.
Benefits of AMC SIP
It is a unique investment method and is accompanied by several potential advantages as follows:
- As of December 20, 2024, there are nearly 49 registered AMCs in India. It provides a range of options for investors for AMC SIP.
- This method can potentially provide diversification for an investor’s portfolio.
- Lower fees due to the absence of intermediaries are a crucial attraction.
- SIP is a potential method for long-term investments, where cost is averaged out.
- Suitable for seasoned or knowledgeable investors who can manage their investments without any assistance.
AMC SIP vs Regular SIP
Selecting the better option between these two depends on the investor’s objective, knowledge, investment attitude, risk appetite, AMC’s experience, fund manager, etc. Understanding their difference can also help individuals plan their investments:
| Point of Difference | AMC SIP | Regular SIP |
| Meaning | It is a type of investment which allows investors to directly invest with AMC. | It allows investment with the help of mutual fund distributors, agents, etc. |
| Investment Plans | It allows only direct plans due to elimination of intermediaries | It provides direct and regular plan options based on the investor’s requirement and attitude. |
| Control | Investors have higher control due to their direct association with AMC. | Investors may have to adhere to the intermediaries in some decisions. |
| Expense ratio | Lower due to no middle levels and direct contact. | Higher due to cost for account maintenance, management, etc. |
| Transparency | Higher than regular plan schemes. | Lower due to varied middlemen. |
| Suitability | Investors with sufficient market knowledge may take hold of such direct investment. | Investors with less expertise and time may find regular SIPs feasible. |
On a broader view, AMC SIP can be a suitable option when investors are not willing to external interference and have sufficient knowledge and efforts to process with the AMC directly without professional help. However, regular SIP also holds a crucial position for investors with a lack of required efforts.
Conclusion
The unique option of AMC SIP aims to establish a direct connection between investors and the AMC. It provides direct access and better transparency for investors. Compared to the regular SIP, this investment can give a potential edge to the investors based on the lower cost, control and diversification. However, only investors with sufficient market or mutual fund knowledge can find a suitable alternative to invest without the intervention of intermediaries. Therefore, understanding personal investment horizons is crucial.
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