Annual management charge (AMC)


What is the annual management charge?

The annual management charge (AMC) is a fee that is paid to the fund manager to cover the costs of managing the fund. The AMC is typically expressed as a percentage of the fund’s assets, and it is deducted from the fund’s daily net asset value (NAV).

The AMC covers a variety of costs, including:

  • The fund manager’s fees
  • The costs of research and trading
  • The costs of administration and compliance

Do all funds charge the same AMC?

The AMC can vary from fund to fund, depending on the size of the fund, the complexity of the fund’s investment strategy, and the fees charged by the fund manager.  In general, index funds have lower AMCs than actively managed funds. This is because index funds are passively managed, which means that they track a specific market index, such as the S&P 500. Actively managed funds, on the other hand, are managed by a team of investment professionals who try to outperform the market.

Is it important consider the AMC when choosing funds?

When choosing a fund, it is important to consider the AMC. A lower AMC can help to improve your investment returns over time. Here are some additional things to keep in mind about AMCs:

  • AMCs are typically deducted from the fund’s net asset value (NAV) on a daily basis. This means that the NAV will always reflect the AMC, even if you don’t actually pay the AMC directly.
  • AMCs are not the only fees that you may pay when investing in a fund. There are other fees, such as transaction fees and sales charges, that you may also need to consider.
  • You can find information about a fund’s AMC in the fund’s prospectus. The prospectus is a legal document that provides detailed information about the fund, including its investment objectives, risks, and fees.