![]() However, for actively managed funds that are attempting to outperform the market, more assets aren’t necessarily a good thing. This can sometimes be the case with index funds based on broad indexes such as the S&P 500. Investors may benefit from investing in funds with large amounts of assets if it leads to lower expense ratios for investors. They’re trying to show that a lot of people have already entrusted them with their money and that’s why you should too. ![]() If a wealth management firm manages $2 billion and charges a 1 percent annual fee, the firm will bring in $20 million in revenue.įinancial firms and funds often like to tout high levels of AUM as a way to attract new investors. ![]() Many financial advisors, wealth management firms and investment funds charge a management fee based on assets under management. Assets also change due to changes in the value of the underlying investment. The level of assets will fluctuate as new money enters the fund and as some investors withdraw money out of the fund. You may also see individual mutual funds or ETFs reference AUM, which measures the amount of money that is managed in that particular fund. For example, a wealth management firm may have $2 billion in AUM, which means they manage $2 billion on behalf of their clients. Assets under management: What it means and how it’s calculatedĪssets under management measures the market value of the investments managed by a particular firm or fund. Here’s what you should know about AUM including how it’s calculated and what it means for your fees. Assets under management is a way to measure the amount of money that is managed by a firm or entity such as a fund. When it comes to investing in mutual funds, ETFs or working with a financial advisor, you may see references to assets under management, or AUM.
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