Asset under management or funds under management is the total market value of securities a financial institution such as a bank, mutual fund, or hedge fund manages on behalf of its client. This is the asset under management meaning.
I will provide an example for a better understanding.
Let’s say you have invested in mutual funds with a diversified portfolio of stocks and bonds. Suppose in the mutual fund you have invested $1.5 billion and $ billion in government bonds and $1.5 billion in stocks and $ 1 billion in cash. The total value comes to $6 billion for the fund’s assets management.
Avail home loans from preferred banks through NoBroker easilyNow that we know what is asset under management (AUM), let us understand the importance of AUM.
Importance of Assets Under Management:The total value of AUM helps to measure the size of the financial organisation and the key performance indicator of success. The bigger the AUM the bigger the revenue in terms of management fees. Generally, financial management looks at the value of AUM and compares it to its competitors to understand the business trend.
The value of assets under management determines if an organisation should comply with the specific guidelines or not.
Calculating assets under management can be tricky because different institutions calculate assets under management in different ways. A financial institution can include deposits and cash, mutual funds, and their calculations. Other institutions can only consider funds under discretionary management which can be traded on behalf of the clients.
This was all about asset under management meaning. Hope you find this information useful.
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What is asset under management?
Amish
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1 Year
2022-11-29T10:30:32+00:00 2022-11-29T10:30:33+00:00Comment
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