Assets Under Management

Assets Under Management (AUM) refers to the total market value of all the financial assets that a financial institution, investment firm, or individual portfolio manager manages on behalf of its clients. AUM is a critical metric in the financial industry as it reflects the scale and success of an investment firm or asset manager and serves as a benchmark for comparing their size and influence in the market.

AUM can fluctuate based on several factors, including the performance of the underlying investments, client deposits and withdrawals, and changes in market conditions. For example, when the stock market experiences a significant rise, the value of assets in a portfolio may increase, thus boosting the AUM. Conversely, market downturns or substantial client withdrawals can reduce the AUM. This metric is essential for determining management fees in many investment firms, as these fees are often calculated as a percentage of the total AUM. It also serves as an indicator of the firm’s ability to attract and retain clients, reflecting investor confidence in the firm’s investment strategies and performance.