Learn all about assets under management (AUM)
Posted: Wed Dec 11, 2024 10:21 am
Assets Under Management (AUM ) is an indicator that represents the volume of assets managed by an entity on behalf of its clients. For example, in the case of an investment fund, the manager will take the current value of all its assets, including stocks, bonds, commodities, etc. and add them together to give its assets under management.
As cash flows into the fund and purchases of other assets are made, the fund's assets under management (AUM) will increase. If money flows out of the fund because unitholders make redemptions, this indicator will decrease.
Table of Contents
What are assets under management (AUM) used for?
It is a barometer of investor sentiment
Information on the quality of a fund
Calculation of commissions
Indicator for regulatory issues
A way of comparison with other funds
How are assets under management calculated?
Assets under management worldwide
Invest in mutual funds through inbestMe
What are assets under management (AUM) used for?
AUM is a very important indicator for both the investment fund manager and the investors, as it provides very valuable information on market sentiment.
It is a barometer of investor sentiment
Market analysts often use AUM to gauge market sentiment. Typically, when gambling data usa phone number this indicator rises, it is because there is buying taking place and, consequently, investors are increasing their positions in mutual funds and other instruments.
On the other hand, when AUM is reduced, the reason is usually due to sales of mutual funds, generally because they need liquidity to meet all the redemptions. In other words, it is a symptom of redemptions in funds and, therefore, negative market sentiment.
Information on the quality of a fund
The AUM also serves to some extent to gauge the quality of an investment fund. The reason is that the higher the AUM, the more investors are expected to trust the manager to manage their money.
However, AUM does not necessarily indicate the success of a mutual fund. Due to market fluctuations, AUM decreases in a bear market and increases if the market is developing positively, but this is not an indicator of successful sales.
Calculation of commissions
AUM is also important when calculating the fund's costs and fees. Some products set their costs based on the volume of assets under management. Generally, the larger the assets, and therefore the larger the AUM, the lower the costs.
This makes the fund more attractive and allows it to obtain a share of the assets of many investors.
Indicator for regulatory issues
AUM is an indicator used by major regulatory bodies, such as the SEC in the US or the CNMV in Spain, to establish certain regulations.
For example, in the United States, the requirement for SEC registration can range from $25 million to $110 million in AUM, depending on several factors including the size and location of the company.
A way of comparison with other funds
The AUM is also an indicator that allows for comparable comparisons between two investment funds. The AUM value is always similar, regardless of the assets in which the fund invests.
That is, it is a way of homogenizing the quality of various investment funds.
How are assets under management calculated?
Methods for calculating assets under management vary from one company to another. This indicator can vary on a daily basis depending on market fluctuations. In addition, an entity's total assets under management can increase when new clients and their assets are attracted.
Download guide Learn to invest easily
Assets under management worldwide
AUM has continued to grow in recent years, and all indications are that it will continue to do so in the future. According to a study by PriceWaterhouseCoopers , the volume of assets under management will increase to $145 trillion by 2025, having doubled in the last ten years.
According to this report, the rapid growth of AUM is growing exponentially worldwide, giving an idea of the amount of assets currently managed by investment funds and other investment firms.
Invest in mutual funds through inbestMe
Through inbestMe, you can invest, with greater profitability and fewer fees, in some of the index funds with the largest AUM in the world. With up to 85% lower costs than traditional funds, thus improving your profitability.
As cash flows into the fund and purchases of other assets are made, the fund's assets under management (AUM) will increase. If money flows out of the fund because unitholders make redemptions, this indicator will decrease.
Table of Contents
What are assets under management (AUM) used for?
It is a barometer of investor sentiment
Information on the quality of a fund
Calculation of commissions
Indicator for regulatory issues
A way of comparison with other funds
How are assets under management calculated?
Assets under management worldwide
Invest in mutual funds through inbestMe
What are assets under management (AUM) used for?
AUM is a very important indicator for both the investment fund manager and the investors, as it provides very valuable information on market sentiment.
It is a barometer of investor sentiment
Market analysts often use AUM to gauge market sentiment. Typically, when gambling data usa phone number this indicator rises, it is because there is buying taking place and, consequently, investors are increasing their positions in mutual funds and other instruments.
On the other hand, when AUM is reduced, the reason is usually due to sales of mutual funds, generally because they need liquidity to meet all the redemptions. In other words, it is a symptom of redemptions in funds and, therefore, negative market sentiment.
Information on the quality of a fund
The AUM also serves to some extent to gauge the quality of an investment fund. The reason is that the higher the AUM, the more investors are expected to trust the manager to manage their money.
However, AUM does not necessarily indicate the success of a mutual fund. Due to market fluctuations, AUM decreases in a bear market and increases if the market is developing positively, but this is not an indicator of successful sales.
Calculation of commissions
AUM is also important when calculating the fund's costs and fees. Some products set their costs based on the volume of assets under management. Generally, the larger the assets, and therefore the larger the AUM, the lower the costs.
This makes the fund more attractive and allows it to obtain a share of the assets of many investors.
Indicator for regulatory issues
AUM is an indicator used by major regulatory bodies, such as the SEC in the US or the CNMV in Spain, to establish certain regulations.
For example, in the United States, the requirement for SEC registration can range from $25 million to $110 million in AUM, depending on several factors including the size and location of the company.
A way of comparison with other funds
The AUM is also an indicator that allows for comparable comparisons between two investment funds. The AUM value is always similar, regardless of the assets in which the fund invests.
That is, it is a way of homogenizing the quality of various investment funds.
How are assets under management calculated?
Methods for calculating assets under management vary from one company to another. This indicator can vary on a daily basis depending on market fluctuations. In addition, an entity's total assets under management can increase when new clients and their assets are attracted.
Download guide Learn to invest easily
Assets under management worldwide
AUM has continued to grow in recent years, and all indications are that it will continue to do so in the future. According to a study by PriceWaterhouseCoopers , the volume of assets under management will increase to $145 trillion by 2025, having doubled in the last ten years.
According to this report, the rapid growth of AUM is growing exponentially worldwide, giving an idea of the amount of assets currently managed by investment funds and other investment firms.
Invest in mutual funds through inbestMe
Through inbestMe, you can invest, with greater profitability and fewer fees, in some of the index funds with the largest AUM in the world. With up to 85% lower costs than traditional funds, thus improving your profitability.