What are the similarities/differences between UTMCs And AMCs?
Key Differences
UTMCs pool funds from various investors and invest their funds based on a specific strategy or mandate. Investors own units that represent their proportional ownership of the unit trust fund’s net assets. Unit trust funds are more suitable for smaller investment amounts, as diversification is achieved by pooling funds from various investors.AMCs manage each investor’s portfolio based on a private mandate, taking into account the individual investor’s returns requirements, risk tolerance and constraints. Each investor fully owns his/her private mandate portfolio. Private mandate portfolios managed by AMCs are more suitable for larger investment amounts in order to achieve diversification.
Key Similarities
The fee structures of both UTMCs and AMCs are similar. They charge an annual management fee, and also typically impose an initial sales charge. They typically invest in similar asset types, i.e. equity, bond, money market, mixed asset or property.