What is an Asset Management Company (AMC)?

An asset management company (AMC) is a firm that invests pooled funds from clients, putting the capital to work through different investments including stocks, bonds, real estate, master limited partnerships, and more. Along with high-net-worth individual portfolios, AMCs manage hedge funds and pension plans, and to better serve smaller investors create pooled structures such as trust funds, mutual funds, index funds, or exchange-traded funds, which they can manage in a single centralized portfolio.

Asset management companies are colloquially referred to as money managers or money management firms. Those that offer public mutual funds or exchange-traded funds (ETFs) are also known as investment companies or mutual fund companies.

Key Takeaways

An asset management company (AMC) invests pooled funds from clients into a variety of securities and assets.
AMCs range from personal money managers, handling high-net-worth individual accounts, to large investment companies sponsoring mutual funds.
AMC managers are compensated via fees, usually a percentage of a client's assets under management.
Most AMCs are held to a fiduciary standard.

Understanding AMCs

Because they have a larger pool of resources than the individual investor could access on their own, asset management companies provide investors with more diversification and investing options. Buying for so many clients allows AMCs to practice economies of scale, often getting a price discount on their purchases. Pooling assets and paying out proportional returns also allow investors to avoid the minimum investment requirements often required when purchasing securities on their own, as well as the ability to invest in a larger assortment of securities with a smaller amount of investment funds.

AMCs vs. Brokerage Houses

Brokerage houses and asset management companies overlap in many ways. Along with trading securities and doing analysis, many brokers advise and manage client portfolios, often through a special "private investment" or "wealth management" division or subsidiary. Many also offer proprietary mutual funds. Their brokers may also act as advisors to clients, discussing financial goals, recommending products, and assisting clients in other ways.

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Investment involves risks. Diversification and asset allocation may not fully protect investors from market risks, and past performance does not represent future performance. Change at any time according to market conditions. Investment value and income may go up or down and cannot be guaranteed. Individual stock prices do not represent the return of the fund. Read more fund risk tips