Glossary - Assets Under Management (AUM)
Assets Under Management (AUM) refers to the total market value of the investments that a person or entity manages on behalf of clients. AUM includes the capital raised from investors and earnings from investment. It is a measure used by financial institutions to gauge the size and success of the investment manager's ability to attract and manage investment capital.
Also known as
- Investment Under Management
- Funds Under Management (FUM)
Use cases examples
- Annual Report: As of December 31, 2022, our Assets Under Management (AUM) totaled $4.5 billion, reflecting a 20% growth from the previous year.
- Investment Management Agreement: The fees charged by the Manager will be based on the Assets Under Management (AUM) as defined in Section 5 of this agreement.
Considerations for investors
- Considering the impact of AUM size on investment performance, as large AUMs might lead to market impact issues, whereas too small AUMs might indicate lack of experience or scale.
- Assessing the fee structure related to AUM, as fees typically decrease (as a percentage) at higher levels of AUM, potentially affecting net investment returns.
Considerations for founders
- Understanding how AUM affects management fees and, consequently, the net returns of the company's investments.
- Evaluating the experience and performance track record of managers with significant AUM to ensure alignment with the company's investment strategy.
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