What Is Assets Under Management (AUM)?
Assets Under Management (AUM) is a term used to describe the total market value of all assets that are managed by an individual or organization. This includes investments such as stocks, bonds, mutual funds, and other financial instruments. AUM can also refer to the amount of money invested in a particular asset class or portfolio. It is important for investors and fund managers to understand their AUM because it helps them make informed decisions about how much they should invest in different types of assets.
The calculation of Assets Under Management involves taking into account both current and future values of each asset held within the portfolio. The current value represents what the investor has already paid for the asset while future values represent potential returns from holding onto those same assets over time. By understanding their AUM, investors can better assess risk levels associated with certain investments and determine which ones may be more suitable for their portfolios based on expected return rates versus risks taken on by investing in them. Additionally, this information allows fund managers to accurately track performance against benchmarks set out at inception so that any changes made along the way can be monitored accordingly.