Asked by: Nixon Thillens
personal finance mutual funds

What is AUM in mutual fund?

Last Updated: 14th May, 2020

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In finance, assets under management (AUM),sometimes called funds under management (FUM), measures thetotal market value of all the financial assets which a financialinstitution such as a mutual fund, venture capital firm, orbroker manages on behalf of its clients andthemselves.

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Considering this, what is the meaning of AUM in mutual fund?

Assets under management (AUM) refers tothe total market value of investments managed by a mutualfund, money management firm, hedge fund, portfoliomanager, or other financial services company.

One may also ask, how AUM is calculated? Assets under management is the total market valueof all securities portfolios for which an asset manager providescontinuous and regular supervisory or management services. Sincethe value of most financial assets changes on a daily basis, theAUM for an investment manager also changesdaily.

In this way, how does AUM affect mutual funds?

AUM and market movements Lesser value generally means lower fees. For instance,say, a 100 investors have cumulatively invested Rs. 10,000 in amutual fund that has earned 10% returns. In a nutshell,AUM is a good way to assess a fund's popularity andperformance. But it shouldn't affect your decision to investor not.

Is NAV and AUM the same thing?

And, Net Asset Value (NAV) is Rs 10 (AUM divided by the total number of units of the scheme. Thisis the formula to calculate the NAV). So, in one year thevalue of a unit of the scheme has increased from Rs. 10 to Rs. 20.This, the value of each unit of the scheme isNAV.

Related Question Answers

Glenis Michurin

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What is AUM stand for?

assets under management

Claudio Vilchez

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What Aum means?

Assets under management (AUM) is the total marketvalue of the investments that a person or entity manages on behalfof clients. Assets under management definitions and formulas varyby company.

Arquimedes El Arabi

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How do you pronounce AUM?

Om is simply pronounced the way it is written.Against this, Aum is pronounced as aa-uu-eemm. InSanskrit, 'O' is a diphthong sound. This means that it is formed bycombining the two sounds 'A' and 'U'.

Rubie Prateek

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What is fund size?

A lot of investors believe that the size of amutual fund is important. In this context, size meansthe amount of money that a fund manages. If a smallerfund has a better track record than a larger fund ofthe same type, then by all means investors should choose thesmaller one.

Valorie Czybulka

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What is Aum chanting?

Aum is the cosmic vibration of God withincreation. The word AUM, when written properly, containsthree letters, signifying the threefold nature of Cosmic Vibration.In English, this word is often written OM, because the vowel“O” is pronounced as a diphthong.

Sellam Goldbaum

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How is NAV calculated with example?

We calculate the NAV of a mutual fund bydividing the total net assets by the total number of units issued.To get the total net assets of a fund, subtract any liabilitiesfrom the current value of the mutual fund's assets and then dividethe figure by the total number of units outstanding.

Arianna Lutherer

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What is NAV price?

Net asset value (NAV) is the value of anentity's assets minus the value of its liabilities, often inrelation to open-end or mutual funds, since shares of such fundsregistered with the U.S. Securities and Exchange Commission areredeemed at their net asset value.

Dahman Vyaznikovtsev

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Does fund size affect performance?

However, the effect of the fund size ofmutual fund performance is a growing concern, especially inlight of massive inflows that have increased the mean sizeof funds in the recent past. Over the past three years,investors have dumped over Rs 3 lakh crore of assets in the handsof equity mutual fund managers.

Amrinder Rustichelli

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What is asset size in mutual fund?

Open-ended mutual funds grow their assetsize in two ways: Strong performance of stocks and/or bonds inthe fund's portfolio. When the underlying assets in aportfolio increase in value, the fund's asset sizeincreases.

Ambreen Sanchez Crespo

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Which AMC is best for mutual funds?

Here are the top 10 mutual fund investment companies inIndia.
  • ICICI Prudential Mutual Fund.
  • HDFC Mutual Fund.
  • Aditya Birla Sun Life Mutual Fund.
  • Reliance Mutual Fund.
  • SBI Mutual Fund.
  • L&T Mutual Fund.

Suzie Beneroso

Pundit

What is in a mutual fund?

A mutual fund is a company that pools money frommany investors and invests the money in securities such as stocks,bonds, and short-term debt. The combined holdings of the mutualfund are known as its portfolio. Investors buy shares inmutual funds.

Gagandeep Obele

Teacher

What is expense ratio in mutual fund?

An expense ratio is the amount companies chargeinvestors to manage a mutual fund or exchange-tradedfund (ETF). The expense ratio is calculated bydividing a mutual fund's operating expenses by theaverage total dollar value for all the assets within thefund.

Marci Nilani

Teacher

Which company has the most assets under management?

Largest companies
Rank Firm/company AUM (US$bn)
1 BlackRock 6,288
2 The Vanguard Group 5,100
3 Charles Schwab Corporation 3,360
4 UBS 3,101

Domonique Manent

Teacher

What are assets under custody?

Assets under administration may also be reportedwith assets under custody. AUM refers to assets thatare actively managed by fund managers and portfolio managers withfiduciary responsibility and authorization to make investmentdecisions on behalf of investors.

Nabiha Ferrel

Teacher

What is meant by hedge fund?

Hedge funds are alternative investments usingpooled funds that employ different strategies to earn activereturn, or alpha, for their investors. One aspect that has set thehedge fund industry apart is the fact that hedgefunds face less regulation than mutual funds and otherinvestment vehicles.

Sidiki Braud

Reviewer

How is NAV calculated?

Calculating a fund's NAV is simple: Simplysubtract the value of the fund's liabilities from the value of itsassets, and then divide the result by the number of sharesoutstanding. To figure out a fund's total assets, we add the marketvalue of all securities held by that fund to its total cash andcash equivalents.

Hella Guinet

Reviewer

Why is an asset an asset?

Anything tangible or intangible that can be owned orcontrolled to produce value and that is held by a company toproduce positive economic value is an asset. Simply stated,assets represent value of ownership that can be convertedinto cash (although cash itself is also considered anasset).

Arles Ayastia

Reviewer

What is SIP account in banking?

A SIP is a flexible and easy investment plan.Your money is auto-debited from your bank account andinvested into a specific mutual fund scheme.You are allocatedcertain number of units based on the ongoing market rate (calledNAV or net asset value) for the day.

Sona Pappayiorgas

Reviewer

How does AUM affect portfolio turnover?

It is calculated by dividing the lesser ofpurchases/sales by average asset under management (AUM). Theaverage AUM of the fund is Rs 1200 crore. Hence, thePortfolio Turnover Ratio of the fund is 25%. It meansthat 25% or one-fourth of the assets of the portfolio werechurned over the last one year.