Alternatively, they might only include the capital a manager uses to make client transactions on a discretionary basis.įor example, Fidelity Investments is a Boston-based financial services company that operates all over the globe. Others might calculate AUM on a client-by-client basis. Some organizations might combine all cash and bank deposits for every one of their clients. This is considered a best practice before offering services to ensure the individual has enough assets to withstand a certain degree of losses on a given investment.Ĭompanies and fund managers tend to define and calculate AUM in different ways. Financial institutions will sometimes ask for the individual AUM of a client.

In addition to regulators, fund managers and financial advisors also use AUM to show the financial position of prospective clients. Securities and Exchange Commission (SEC). For example, financial advisors in the United States with an AUM of $100M or more are generally required to register with the U.S. It’s also used to show whether fund managers will need to follow certain laws or regulations. That’s because clients often see higher investment inflows and a large AUM to be a sign that a fund manager knows what they’re doing.īut AUM isn’t just about marketing. Sometimes referred to as funds under management, AUM is often used as a marketing tool by mutual fund managers to attract new clients. It can apply to venture capital firms, brokerages, mutual funds, investment advisors, and other financial institutions that invest money or assets for somebody else. The total market value of investments being managed for others by an individual or fund is called assets under management (AUM).

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