What do you do when you’re interested in a mutual fund scheme, but know nothing about its working?
Simple, you look up the mutual fund online! Everything you need to know about a fund is available at your fingertips. However, the same was not true at the start of the mutual fund industry in India.
For the longest time, investors deemed mutual funds a risky investment. They had no faith in the market, primarily because there was a serious lack of awareness about the investment scheme. It was clear the industry needed a push from the government. As a result, the Association of Mutual Funds in India (AMFI) was born on 22nd August 1995.
What is AMFI?
AMFI is a non-profit organisation that SEBI regulates. The body serves as the primary regulator for the industry and keeps the investors informed about the latest developments in the market. It also aims to develop the industry ethically and professionally to ensure maximum transparency. And as of now, AMFI comprises over 40 SEBI-registered Asset Management Companies (AMC).
Additional Read: How to Choose Mutual Funds for Beginners?
How does AMFI work?
Think of the AMFI association of mutual funds in India as the one-stop-shop for everything you need to know about the MF market. To that end, AMFI serves the following functions:
- Defines and maintains a uniform set of professional standards
- Distributes information about mutual funds
- Takes disciplinary actions against unlawful practices and violations of Code of Conduct
- Safeguards the interest of the investor and AMCs
- Rolls out nationwide investor awareness programs to boost awareness about mutual fund schemes
- Closely works with SEBI to regulate the industry
- Represents the government, finance ministry, SEBI, and RBI on behalf of the mutual fund industry
However, this is not all! To boost the credibility of the industry further, AMFI offers protection through the AMFI registration number or ARN. Every adviser, fund house, agent, and the trustee has to register to earn a unique ARN. It serves as a licence for the holder to sell mutual funds to prospective investors. But, how does it benefit the investors?
How does AMFI protect the investors?
As mentioned above, the distribution of MF-related details falls under the purview of the association of mutual funds in India. NAV changes, expense ratio, ETF, fund manager profiles, and other crucial information is communicated duly on their official website. So, the average investor is always in the know. Nevertheless, they can still fall prey to fraudulent practices.
Case in point: suppose you want to invest in a fund through SIP, so you connected with an MF distributor. To check if they are authorised by the AMFI and hold a valid ARN, you can go to AMFI’s official website and run a quick background check.
Additional Read: What Are the Advantages of Investing in Mutual Funds?
With AMFI, mutual fund industry has undoubtedly become credible and flourished leaps and bounds since the 90s. So, if you’re toying with the idea, get started today! Join the Moneyfy app to get daily MF updates directly on your smartphone. Read the latest news, compare charts, and a lot more.