Asset Management Company (AMC): Meaning, pros & cons

Investment companies and high net-worth individuals have longed sourced avenues for investments into the money market. Asset management companies offer options to investors to grow their wealth through varying resources.

What is an Asset Management Company

Asset management companies (AMC) are institutions that place clients gathered funds in stocks, bonds, real estate, master limited partnerships, and other investments. AMCs manage high net-worth individuals, portfolio investors, hedge funds, pension plans, and pooled structures like mutual funds, index funds, or exchange-traded funds (ETFs), which are managed in a single centralized portfolio for a better service to smaller investors.

A client’s pooled funds are put into a variety of securities and assets by an asset management company (AMC). AMC managers are compensated through fees, typically a percentage of a client’s assets under management.  The relationship between the asset management company and the client is a fiduciary standard.

Understanding Asset Management Companies (AMCs) 

AMCs give investors more options for diversification and investing. This diversification and investing pool is caused by the AMC’s access to a larger pool of resources than an individual investor could. AMCs can utilize economies of scale by purchasing for a large number of customers, frequently receiving price reductions on their purchases.

Investors can avoid the minimum investment requirements that are frequently required when purchasing securities on their own by pooling assets and receiving proportional returns, and they can also invest in a wider range of securities with fewer investment funds.

Pros of having an Asset Management Company manage your assets

1. Proficient, lawfully responsible administration

2. Portfolio enhancement

3. More prominent speculation choices

4. Economies of scale

Cons of having an Asset Management Company manage your assets

1. Sizeable administration charges

2. High-record essentials

3. Chance of failing to meet expectations of the market

Regulations of Access Management Companies in Nigeria

Guidelines are a significant piece of the monetary business. Capital can continue to flow freely throughout the market with oversight. Nonetheless, it additionally safeguards the interests of purchasers and financial backers by protecting them from a lot of chance and misrepresentation because of deceitful experts.

The Securities and Exchange Commission (SEC) is largely in charge of the asset management sector in Nigeria. There is an overlap between the SEC and other agencies, even though they are distinct. A company’s regulatory situation can become quite complicated with several agencies interfacing with them. Read on to learn more about how these and other agencies regulate and control the asset management industry.

The Securities and Exchange Commission (SEC) 

SEC is an independent government agency that was established in 1979 by the Investment and Securities Act (ISA). The SEC is required to safeguard investors and guarantee equity in securities markets in Nigeria. The Securities and Exchange Commission (SEC) has extensive regulatory authority over the Nigerian securities markets, which includes regulation, enforcement and exchange oversight.

An investment advisor is a company that offers securities investment advice. Companies that manage client portfolios are included in this. Investment advisors are regulated by the SEC. 

According to the SEC, registration does not imply the approval of any particular investment manager or adviser. Instead, it simply indicates that the company has agreed to abide by SEC regulations and made certain disclosures. Unscheduled audits are permitted for SEC-regulated businesses.

Asset management companies and their investment advisors are governed by several other regulatory agencies in addition to the SEC, organizations like the Federal Competitions and Consumers Protection commission and the Asset Management Corporation of Nigeria (AMCON).

Top 8 Asset Management Companies in Nigeria 

1. Asset Management Cooperation of Nigeria (AMCON) 

Is unquestionably one of Nigeria’s first leading asset management firms. AMCON, which was established in 2010 by the Nigerian federal government in conjunction with the Central Bank of Nigeria (CBN), has established itself as one of the best providers of individual and business asset management.

2. Asset and Resource Management Company Ltd (ARM)

The major objective of Asset and Resource Management Company Ltd is to demonstrate the vertical structure of Nigeria’s economy. In everything they do, these promises can be filtered as professionalism, loyalty, fairness/equity, and integrity.

Asset and Resource Management Company Ltd. (ARM) ARM asset management ltd is a Nigerian financial service company that offers asset management as well as financial assistance, including the purchase of securities for a variety of investment opportunities. ARM offer jumpers in monetary administrations like meeting, speculation and, surprisingly, stock buying in the capital market.

3. Cowry Asset Management Ltd 

This is yet another prominent Nigerian asset management firm with distinct characteristics. As one of their primary accomplishments, they have demonstrated that they are a valuable component to others ever since they were established.

4. Cash Craft Asset Management 

As one of Nigeria’s leading asset management firms, Cash Craft rose to number 4. Within a few minutes, they offer individuals and cooperative bodies financial services.

They offer services like; services for asset management, security investing, and stockbroking Tower Asset Management ltd. Tower Asset Management ltd. (TAM) is another prominent Nigerian asset management and financial services firm that has won the trust of thousands of individuals and businesses. Portfolio management, financial advisory, and planning services are provided by them.

5. Frontier Capital Alternative Asset ltd (FCAAL) 

Is an alternative asset management and debt resolution company that also provides swap and acquisition and its related services and other related services.

6. FCSL Asset Management Company Ltd 

When it comes to financial affairs management and consultation, they rank among the best of the best.

This business deals with risk management and how to help people stabilize their money or put it to good use by investing it.

7. Sterling Asset Management and Trustees Limited (SAMTL)

Real Resource The executives and Legal administrators Restricted (SAMTL) officially known as NAL resource the board and Legal administrator restricted were consolidated on September 1985 as a confidential restricted obligation organization.

As a financial management company, SAMTL offers a variety of financial services to individuals and businesses, including leasing, warehouse services, and financial advisory.

8. Forte Asset Management

Forte Asset Management company Ltd. Since its inception in 2004, this business has established itself as one of the best providers of financial services to its customers.

Conclusion

The service of managing a client’s money is asset management. That entails, at its core, determining a client’s financial objectives and working to achieve them through portfolio management (buying and managing stocks, bonds, and funds).

Frequently Asked Questions (FAQs)

Does AMCON offer services to the federal government alone?

No, AMCON was created to offer services to the general populace.

What are the laws regulating asset management companies in Nigeria?

The ISA, the FCCPA, and the AMCON Act.