AUM (Assets Under Management)

Assets Under Management (AUM) is the total market value of investments managed by an investment firm, fund, or advisor. It's a key metric for measuring a fund's size and success.

Formula

AUM = Total Value of All Investments Managed

For an ETF: if the ETF has 100 million shares outstanding and trades at $100/share, AUM = $10 billion.

Example

Berkshire Hathaway (BRK-B) under Warren Buffett manages over $600 billion in AUM. Vanguard manages over $8 trillion in AUM across thousands of funds. Fidelity manages $13+ trillion. An individual stock with 100 million shares at $50/share has $5 billion in AUM if it's an ETF or fund holding that stock.

How to Interpret It

• Larger AUM: Fund has been successful, attracting more investors. Often correlates with lower expenses due to economies of scale.
• Growing AUM: Fund is adding new investors or performing well (asset value appreciating). Positive signal.
• Shrinking AUM: Fund is losing investors or performing poorly (assets depreciating). Negative signal.
• AUM and expense ratio relationship: Larger AUM allows lower expense ratios; a $1 billion fund can charge 0.03%, a $100 million fund needs 0.20%.
• Fund closure: Funds with very low AUM (< $50 million) sometimes close, forcing liquidation.

Limitations

• Growing AUM from fund inflows (new investors) is good; growing AUM from market appreciation is temporary and can reverse.
• AUM doesn't indicate performance; a large fund with $10 billion AUM can underperform a small fund with $100 million.
• AUM can shrink due to both redemptions and market declines, making it hard to separate performance from flows.
• Some funds cap AUM to maintain their strategy, so growth is limited by choice.

Related Terms

• Fund Size — another term for AUM
• Expense Ratio — the denominator in expense ratio calculations
• ETF — vehicle for AUM measurement
• Fund Flows — investor inflows and outflows affecting AUM