Key players in the mutual funds industry

For first-time investors, knowing who does what in the mutual fund business can be confusing. There are several participants including distributors, advisors, and asset managers, each fulfilling specific functions within the ecosystem. Read the article to understand the role of these key players in the mutual fund industry.

Published on 13 November 2025

3 min read

Asset managers: the manufacturers 

What they do: 

Asset management companies (AMCs) are manufacturers of mutual funds. AMCs develop various types of funds, including equity, debt, hybrid, and index funds.

AMCs have professional fund managers who manage fund portfolios and decide where to invest. They operate under SEBI’s regulatory framework to stay compliant. This ensures market transparency and fairness. 

How they earn: 

AMCs charge an expense ratio, deducted from the fund itself. This pays for fund management, operations and, in regular plans, distributor commissions. 

Why it matters for you: 

When you invest in a mutual fund, AMCs are responsible for managing and investing your money. They make the investment calls, so you don’t have to pick individual stocks or bonds. 

How participants work together:

The financial system is designed to balance access, advice, and expertise. 

Distributors bring you in. They give you access to mutual funds and will deal with the paperwork of investing.

Advisers  design a plan for you and choose the right funds for your goals. 
 
Asset managers  create and manage the funds.

Mutual fund distributors: the access point

What they do:

Distributors offer mutual funds. They are individuals or firms registered with the Association of Mutual Funds in India (AMFI). Their role is to help you buy, sell, and manage transactions in mutual funds. They can explain their features and handle all the paperwork. But they are not licensed to give comprehensive financial advice, unless they are also registered as an Investment Adviser (IA) with the Securities and Exchange Board of India (SEBI). 

How they earn:

Distributors earn commissions from fund houses. That’s why the “regular plan” of a mutual fund has a slightly higher expense ratio, it includes distributor costs.

Why it matters for you:

If you’re a first-time investor, distributors can simplify the process to get you started. It does come at a cost, and you should pay attention to what that is.

Registered Investment Advisers: Your fiduciary

What they do: 

Registered Investment Advisers (RIAs)are SEBI - Registered Investment Advisers who provide personalised financial guidance to clients based on their investment objectives, risk appetite, and market conditions. Their role is not to sell, but to advise. 

RIAs first conduct a detailed risk profile assessment to understand your investment goals, time horizon and comfort with risk. Based on this, they create an investment plan for you. Once the investment plan is created, RIAs monitor your portfolio regularly and recommend adjustments based on changes in market conditions or your personal circumstances.

Most importantly, RIAs act as a fiduciary. This means they are legally bound to put your interests first. They do not push particular products, and they don’t earn commission from fund houses. They simply provide unbiased advice. 

How they earn:

RIAs charge either a fixed fee or a percentage of Assets Under Advice (AUA), which you pay directly. This direct payment helps keep their guidance unbiased. 

Why it matters for you: 

If you’re serious about wealth building, RIAs can help bring clarity and confidence to your investing. They design a plan aligned to your goals and risk-taking ability and help you stay the course. 

To understand how participants work together in the investment industry, let’s use an example: Imagine you want to save for your child’s education. 

An AMC launches an equity fund. 
A distributor signs you up for a Systematic Investment Plan (SIP), so you add money regularly. 
A SEBI-Registered Investment Adviser checks that this fits your overall goals and your risk appetite.

Key roles at a glance:

Role	Focus	Who pays them?	Regulator	Suited for
Asset manager	Create & manage funds	Investor (via expense ratio)	SEBI	Everyone who invests in mutual funds

Distributor	Access & execution	AMC (via commissions)	AMFI	Investors who need assisted access to a fund

Registered Investment Adviser	Holistic advice & fiduciary planning	Investor (via fees)	i) SEBI  ii) BSE Ltd.	Investors seeking unbiased guidance

Who is right for you? 

In either case, remember that the AMC manages and invests your money.
If you just want to buy a fund, a distributor makes it simple with your first SIP. You could even buy it directly from the AMC. 
If you’re seeking unbiased, long-term financial advice, a SEBI-Registered Investment Adviser can be your fiduciary partner.

Bottom line: Clarity is the foundation of confident investing

Investing is about much more than choosing what fund to buy. Knowing who you’re working with, their roles and responsibilities and how they’re compensated puts you in control of your financial journey. It pays to be clear about who is guiding your money and why. 

Disclaimer: This article is for educational purposes only.