It refers to the total market value of assets being managed by an investment advisor or financial institution, either from one client or many.
To define AUM precisely, the exact definition of AUM varies by institution; some include bank deposits, mutual funds, and cash in their computation, while others only consider the discretionary funds that investors have given an advisor to trade on their behalf.
AUM fluctuates as the value of the assets managed changes with market performance.
What Is AUM in Finance?
When evaluating a portfolio manager, assets under management (AUM) is one metric investors consider.
Among other variables such as management performance, experience, disciplinary history, and other offered services, a greater AUM can be an indicator of a manager who has demonstrated proficiency.
Advisors overseeing less may register with state securities administrators.
AUM Payment and Fees
Managers may charge a percentage of the total AUM they manage for a client for their services, such as 1%.
Screenshot from our animation video showing an example of a 1% advisor fee.
Research the required minimum of investable assets, services offered, fees, disciplinary history, and experience thoroughly prior to selecting a wealth management firm.
Largest Institutions by AUM
At present, the financial institution with the most assets under management is BlackRock, with over $6.8 trillion in assets.
In second is Vanguard Group with just over $6 trillion, followed by UBS Group with $3.26 trillion, Fidelity with $3.2 trillion, and State Street Global Advisors with $3.12 trillion.
AUM vs NAV
NAV, or Net Asset Value, is the total value of assets minus all its liabilities of a fund, such as a mutual fund or ETF, often shown on a per-share basis.
NAV shows what price shares in a fund can be bought and sold at.
AUM by contrast refers to the value of assets managed by an individual or firm, not a fund.
Unlike NAV, AUM is in reference to the total value of assets being managed rather than expressed on a per-share basis.
AUM for ETFs
One of the metrics for determining the quality of an ETF, or Exchange Traded Fund, is AUM, or Assets Under Management.
The more assets that are contained in an ETF, as well as the higher the volume of trading that occurs, the less likely shares of the fund are to swing in price.
This makes these types of funds safe and stable investments.
« Under Management » Meaning
Under management refers to something belonging to a client that is being managed by another party on their behalf.
In the finances industry, this typically refers to assets under management, or the assets that a wealth manager, investment advisor, or mutual fund manager is employing on behalf of their clients.
Assets Under Management Calculation
The calculation used by a company to determine its total Assets Under Management is not always consistent between companies.
Many only count discretionary funds given by investors, but others may include capital owned by executives.
Additionally, AUMs calculation will fluctuate depending on market performance since the assets being managed are typically put into the markets. Financial institutions often release their AUM totals quarterly or annually.
Assets Under Management may also fluctuate based on the performance of investments.
AUM Definition Summary
AUM is an acronym that stands for Assets Under Management.
Assets Under management (AUM) is defined as the total amount of assets under the oversight of a particular asset management company, such as a mutual fund.
Some institutions only count discretionary funds, meaning funds that investors give for investment purposes, while other institutions also count bank deposits and more.