What is AUM?

What is AUM?

Assets Under Management (AUM) refers to the total value of the assets that a financial institution or fund manager manages on behalf of their clients. Assets under management (AUM) is also a measure that tells the size of a mutual fund portfolio. AUM is the total market value of all the categories of assets like stocks, bonds, commodities, other securities, etc. that an asset management company manages on behalf of its investors. AMC acquires funds as per the investing strategy opted by the fund managers with the main objective of maximising investors’ returns. AUM is also a factor that represents the ability of an asset management company to attract and retain investors....

Impact of High AUM on Mutual Funds

1. Considered Trustworthy: Mutual fund schemes with larger AUMs are considered more trustworthy by the investors as they have higher investor participation. It is generally presumed that scheme with a higher AUM will deliver better returns as a fund’s higher AUM will cover all the funds expenses easily and can result in generating better returns than a fund with a small AUM....

Relationship Between AUM and Expense Ratio

1. Asset management companies charges fees for the management of funds, this fees is calculated as a percentage based on the assets under management by the AMC. This fee allows AMC’s to cover the charges which they incur in order to manage funds. The fees are deducted from the returns and combined are called as Total expense ratio....

How to Calculate AUM?

1. AUM (Asset under management) is fluctuating, and its value changes as per the performance of invested assets in different market conditions....

Does AUM affect NAV?

AUM (Assets Under Management) can affect NAV (Net Asset Value) to certain degree. In order to derive NAV of any fund, AUM comes in the picture as NAV is nothing but the average value of holding made by any AMC. NAV is calculated by dividing the total value of all assets of mutual fund along with all other investments holdings by the number of shares outstanding. The key highlight is that NAV is directly proportional to AUM, in case if the AUM of a portfolio increases, it can potentially increase the NAV as well if the value of asset holding by fund increases. Similarly, if the AUM decreases there are chances that it will also decrease the NAV if the value of the assets holding by the fund decreases. NAV is calculated everyday....