With the mutual fund asset class now being embraced by a larger chunk of investors, the investment product and institutions involved in their business referred as asset management companies or AMCs have scaled in size and realized substantial profits and on a more recent basis have tapped the markets to get their shares listed. And with their listing, there comes up a question should investors consider investment in schemes by these MF houses or their shares or both?
Here is a take on this as per experts' view: After the listing of HDFC AMC IPO, there will be two AMCs on the stock exchanges including Reliance Nippon Life Asset Management. Also, there are other AMCs looking to foray into the primary market such as UTI AMC.Currently, there are as many as 40 unlisted AMCs with top funds in their product portfolio.
But before we go further in detail, AMC stocks and AMC fund schemes are two very different products for investment. And the returns from the shares of AMCs which is the asset management company dealing in different mutual fund schemes are dependent on the company's profitability, product penetration as well as other market factors at play at a particular point in time. Also, here in while the rally in equities has been of immense help in the promotion of these AMC companies financially, any downturn will also cast its impact both on the company as well as its different equity-based schemes.
On the other hand, returns from the mutual fund scheme will be based on the fund management style, portfolio selection etc.
Point to note while betting on either AMC stock or fund scheme
Remember, you will be better off by putting your bet on individual fund schemes of the mutual fund house as then even in a case when AMC stock does not generates price appreciation for you due to weak fundamentals or other market-related drivers, the scheme may give you better returns due to investment mandates and their portfolio diversification across asset class.
Also, though investment in AMC stocks, gives investor exposure to high-growth industry as the industry's assets as of now account for just 10% of its GDP. But nonetheless, for a moderate risk-taker, the valuations are placed very high for such AMC stocks. So, all in all, funds are the best product category by these AMCs to gain diversified exposure.