Asset Under Management (AUM)

Assets under management (AUM), also referred to as Funds Under Management, is the market value of the assets that an Investment Advisor or Financial Institution manages on behalf of the investors. AUM can fluctuate daily as per the market situation, reflecting the inflow and outflow of money of a particular investment and the value generated from the performance of the assets.

Assets under management also refer to the extent of funds a Financial Institution or Hedge Fund manages for their clients. AUM is the market value of all the investments managed by a Fund, Venture Capital Agency, Brokerage Company, or a registered Investment Advisor or Portfolio Manager.

For some financial institutions, Assets Under Management comprise bank deposits, mutual funds, and cash. For other agencies, though, AUM denotes only funds under their discretionary management.

AUM is also an important indicator used in evaluating an Investment Advisor's or Hedge Fund's performance and is often used in combination with management performance and experience. Investors usually take higher investment inflows and higher AUM as positive indicators of management quality and experience.

Assets Under Management can increase or drop as per the market situation. AUM may increase when investment performance is positive or when new assets are added. Conversely, AUM is reduced by negative investment performance, redemptions, withdrawals, fund closures, and other adverse events.

From the perspective of the fees charged by Asset Management agencies, rising AUM normally increases the fees that the agency generates, whereas lower AUM results in lower fees.