What Are Assets Under Management (AUM)?

Assets under management (AUM) is the total market va🀅lue of the investments held by a portfolio manager or investment company on behalf of clients. It is the total pool of ওmoney invested.

The AUM of a mutual fund or exchange-traded fund (ETF) is the total amount of money invested in the fund. Similarly, your personal AUM is the amouℱnt you have invested.

Investors consider AUM am💝ong other factors in choosing an investment or an investme🌱nt company.

Understanding Assets Under Management (AUM)

AUM is a relevant number when looking at an investment fund or family of funds, a venture capital firm, a brokerage company, or an individual registered as an investment advisor or portfolio manager.

When calculating AUM, some financial institutions include bank deposits, 澳洲幸运5开奖号码历史查询:mutual funds, and cash, while others limit it to funds from individual investors that are under their discretionary management.

AUM includes the capital the manager can use to make transactions for one or all clients. An investor may need a minimum amount of personal AUM to qualify for a type of investment, such as a hedge fund. An investor’s AUM may determine the type of services received from a 澳洲幸运5开奖号码历史查询:financial advisor or brokerage company.

When an investor has $50,000 in a mutual fund, that money is counted in the total AUM of the fund. The fund manager can buy and sell shares without obtaining special permission from the client, as long as the stated investment objectives are f🐲ollowed.

Calculating AUM

The calculation for assets under management varies somewhat among companies and depends on the flow of 𝕴investor money in and out of a fund. The numbers also fluctuate constantly in response to the ups and downs of the markets and the amount of cash deposited or withdrawn by its investors.

Asset performance, capital apprec🐽iation, and reinvested dividends increase the AUM oꦓf a fund. Assets under management also increase when new customers sign on.

A decrease in AUM occurs following losses in the market value, fund closures, and decrea🎃sed investor inflows.

Calculating AUM involves aggregating the total market value of all assets that an investment manager oversees on behalf of clients. This can include stocks, bonds, mutual funds, ETFs, cash equivalents, and other types of securities.ꦫ

The process entails identif𝔉ying and valuing each asset held within client portfolios, taking into account factors such as current market prices, fair values, and any applicable currency conversions.

Once the market values of all 𝕴a🅺ssets are determined, they are all added together to get AUM.

AUM and SEC Regulation

The 澳洲幸运5开奖号码历史查询:U.S. Securities and Exchange Commiss🍷ion (SEC) requires most firms with AUM ranging between $25 million to $110 million to register with the SEC, depending on several factors, including the size and location of the firm.

In addition, state securities regulators have authority over advisers handling up to $100 million. Advisers with assets under management below $100 million are required to register with the securities regulator of the state where their principal place of business is located.

If a state-registered adviser's AUM hits the $100 million threshold, the company may choose to register with the SEC. Once the company's AUM surpasses $110 million, registration with the SEC is usually mandatory.

AUM and Fees

AUM can be a consideration when calculating fees. Many investment products charge 澳洲幸运5开奖号码历史查询:management fees as a fixed percentage of the🌊 investor's AUM. Financial advisors and personal money managers also charge their clients a fee as a percentage of personal assets under management.

The relationship between AUM and fees is not necessarily straightforward. For example, you may assume that as an investor's AUM increases, so do the fees earned by investment managers.

However, it is 🌳essential to rec🐭ognize that fee structures can vary widely across different investment products and client segments. For example, actively managed funds may charge higher fees than passively managed funds due to the active management and research involved.

Another exception to this i🍬s for larger, institutional clients. Institutional clients may negotiate lower fee rates than retail clients due to the large size of their investments and their bargaining power. Management firms may also proactively lower their fees to entice large investors.

Therefore, higher AUM doesn't always mean higher fees.

AUM and Investment Management Strategy

One of the ultimate goals of an investment firm is to increase its AUM. This means that the compaꦯny has more money to invest, giving it greater leverage for future growth.

Though also not necessarily tied to quantitative financial analysis, client acquisition strategies also play a role in AUM growth. Investment firms can prioritize identifying and acquiring new clients who align with the investment manager's target market and investment objectives in order to grow AUM.

Product 澳洲幸运5开奖号码历史查询:differentiation is another important aspect of AUM growth strat𝐆egies. This involves developing innovative investment products and solutions that address evolving market trends, investor preferences, and regulatory requirements.

For instance, State Street Corp. highlights "State Street Alpha" in its 2023 annual report, an architecture platform used to interpret data at a large scale. New products like this can help a firm bring in capital from new𝓰 or existing cus🐈tomers.

AUM and Investor Psychology

Investor psychology plays a role in growing the AUM of a fund or an investment company. During periods of optimism, investors may allocate more capital to investment vehicles. In pessimistic times, investors may withdraw funds or reallocate assets to 澳洲幸运5开奖号码历史查询:safe havens, resulting in declines in AUM.

Behavioral biases such as herd behavior can play a factor as well. Beginning investors may choose to invest in the ETFs or investment companies that have the highest A🌱UM. This can play into a dangerous cycle where investors follow the money rather than choose carefully.

Example of AUM

The 澳洲幸运5开奖号码历史查询:SPDR S&P 500 ETF (SPY) is an 澳洲幸运5开奖号码历史查询:exchange-traded fund that, as the name implies, holds share⭕s in all of the companies listed in the S&P 500 Index.

As of April 24, 2025, SPY's assets under management totaled more than $572 billion.

The firm that manages the fund, State Street Corp., manages more than 200 mutual funds and ETFs in addition to SPY. As of the end of 2024, the global investment firm had AUM of $4.7 trillion.

Explain Like I'm Five

As an investor, you may be interested in noting the assets under management of a fund you are interested in, or a portfolio♌ manager you might do business with.

A huge AUM number suggests that a large number of investor✃s (or a number of very large investors) have entrusted their money to this fund or manage𝓡r in the expectation that it will grow.

A small number of AUM might suggest that the fund or manager is 🌟not attracting large-scale investment for whatever reason. It may be a nic🐓he fund, a young fund, or an increasingly unattractive fund. More research is indicated.

One note: A large AUM for an exchange-traded fund (ETF) indicates optimism about the benchmark the fund tracks, more than it does confidence in the company that sponsors the fund. The vast majority of ETFs are passively managed, not actively managed.🐭

The Bottom Line

Assets under management (AUM) is the market value of the investments managed by a person or entity on behalf of clients. AUM can reveal the management performance and experience when investors evaluate a company or investment. The SEC regulates firms with large AUMs to protect investors.