Assets under management

Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.

Investors often consider higher investment inflows and higher AUM comparisons as a positive indicator of quality and management experience. Investment management companies generally charge their clients fees as a proportion of assets under management, so assets under management, combined with the firm's average fee rate, are the key factors indicating an investment management company's top line revenue. The fee structure depends on the contract between each client and the firm or fund.

Assets under management rise and fall. They may increase when investment performance is positive, or when new customers and new assets are brought into the firm. Rising AUM normally increases the fees which the firm generates. Conversely, AUM are reduced by negative investment performance, as well as redemptions or withdrawals, including fund closures, client defections and other generally adverse events. Lower AUM tend to result in lower fees generated.