Asset management and funds
Assets under management (AUM)
The total market value of the money a firm manages for clients.
Facts checked against sources onWhat does Assets under management (AUM) mean?
Assets under management is the market value of all the investments a fund manager or wealth manager runs for its clients. Most revenue is a fee charged as a percentage of AUM, so revenue is roughly average AUM times the average fee rate. Example: 50 billion of AUM at an average fee of 0.40 percent (40 basis points) brings in about 200 million a year. AUM changes for two reasons: net flows (clients adding or withdrawing money) and market movement. A rising market lifts AUM, and fees, even if no new client joins.
Where does it come up in case interview prep?
Related terms
- Net flows (net new money)New client money coming in minus money taken out.
- Active versus passive investingTrying to beat the market versus simply tracking it at low cost.
- Basis points (bps)One hundredth of a percent: 100 basis points make 1 percent.
- Weighted averageAn average where each part counts in proportion to its size.
- Sovereign wealth fund (SWF)A state-owned investment fund, often built from oil revenues or reserves.
- General partner (GP)The firm that raises and runs a private equity or venture fund.
- Limited partner (LP)An investor that puts money into a private equity or venture fund.
- Carried interest (carry)The general partner's share of a fund's profits, usually 20 percent.
Learn it in context
See Assets under management (AUM) at work in a lesson from Asset and wealth management, with checks as you go.
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