Asset under management is the term used to describe a collection of investments that are overseen by an investment advisor. An asset can be any item of value, such as money, property, or equipment, and can be owned by individuals, businesses, or organisations. Assets can be categorized into various types, including current assets that can be readily converted into cash, and fixed assets that are utilised for long-term business operations. Certain assets may pose challenges in terms of selling or may hold no value, such as an uncollectible debt.
Asset under management pertains to a securities portfolio that an investment adviser oversees and manages through continuous supervision and management services. This can be exemplified by a mutual fund managed by an investment company, a pension fund managed by a financial advisor, or a hedge fund managed by a portfolio manager. In all these cases, an investment professional is accountable for making investment decisions for the portfolio and ensuring that it aligns with the client’s investment objectives.
Asset Under Management (AUM) refers to the total value of assets that a financial institution or investment firm manages on behalf of its clients.
AUM is calculated by adding up the market value of all the assets, such as stocks, bonds, real estate, and cash, that are being managed by the firm.
AUM is important because it provides an indication of the size and scale of a financial institution or investment firm. It also helps investors assess the firm’s ability to manage their assets effectively.
Yes, AUM can fluctuate over time due to various factors such as market performance, client withdrawals or additions, and changes in investment strategies.
Financial institutions typically charge a percentage fee based on the AUM they manage. This fee is often referred to as the management fee and is calculated as a percentage of the total AUM.
Yes, financial institutions that manage AUM are subject to regulations imposed by regulatory bodies such as the Securities and Exchange Commission (SEC) in the United States. These regulations aim to protect investors and ensure fair practices.
Yes, individuals can choose to have their assets managed by financial institutions through various investment vehicles such as mutual funds, exchange-traded funds (ETFs), or separately managed accounts.
By having their AUM managed by a financial institution, individuals can benefit from professional expertise, diversification, and access to a wider range of investment opportunities.
Yes, individuals have the flexibility to transfer their AUM from one financial institution to another if they are not satisfied with the services or performance of their current provider.
No, while AUM is an important factor, individuals should also consider other factors such as the firm’s track record, investment strategies, fees, and the expertise of their investment professionals before choosing a financial institution to manage their assets.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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