AUM Full Form and Meaning

In the world of finance and investment, there are many terms and concepts that can be confusing for the average person. One such term is AUM, which stands for Assets Under Management. AUM is commonly used in the mutual fund industry and is an important metric for investors to consider when evaluating a mutual fund. In this article, we will explore what AUM means in mutual funds, how it is calculated, and why it is important for investors.

What is AUM?

As mentioned earlier, AUM stands for Assets Under Management. In the context of mutual funds, it refers to the total value of the assets that a mutual fund company manages on behalf of its investors. These assets can include stocks, bonds, and other securities that are part of the mutual fund’s portfolio.

AUM is a key metric used by mutual fund companies to measure the size and success of their business. Generally speaking, the larger the AUM, the more successful a mutual fund company is considered to be. This is because a larger AUM typically means that more investors are entrusting their money to the company, which can result in higher fees and more revenue for the company.

How is AUM calculated?

Calculating AUM for a mutual fund is a relatively simple process. It involves adding up the total value of all the securities in the fund’s portfolio.

AUM = Total value of all assets held in the mutual fund's portfolio

This value is then adjusted for any liabilities that the fund may have, such as outstanding debt or fees owed to service providers. The resulting number is the fund’s AUM.

For example, if a mutual fund has a portfolio of stocks and bonds worth Rs.1 billion, and it owes Rs. 50 million in fees and other expenses, its AUM would be Rs. 950 million.

Why is AUM important for investors?

As an investor, AUM can be an important metric to consider when evaluating a mutual fund. There are several reasons for this:

  1. AUM can be an indicator of a mutual fund’s popularity and success. Generally speaking, mutual funds with larger AUM are more likely to have a long track record of success and may be considered a safer investment option.
  2. AUM can affect the fees that investors pay. Mutual fund companies typically charge fees as a percentage of AUM, so a larger AUM can result in higher fees for investors. However, some mutual fund companies may offer discounts on fees for investors who invest larger amounts of money, so it’s important to consider the fee structure of a fund when evaluating its AUM.
  3. AUM can impact the liquidity of a mutual fund. In general, mutual funds with larger AUM are more liquid, meaning that it is easier to buy and sell shares of the fund. This is because larger funds typically have more investors, which can result in more trading activity and a more efficient market for the fund’s shares.
  4. AUM can impact the investment strategy of a mutual fund. Mutual funds with larger AUM may face constraints on their investment strategies, as it may be more difficult to find enough high-quality investment opportunities to justify investing such a large amount of money. As a result, some mutual funds may have to invest in securities that are less attractive in order to maintain their AUM.

AUM is an important metric for mutual fund companies and investors alike. It is a measure of the total value of assets that a mutual fund company manages on behalf of its investors, and can be an indicator of the popularity, success, and liquidity of a mutual fund. As an investor, it’s important to consider a mutual fund’s AUM when evaluating its suitability for your investment portfolio, as it can impact the fees you pay, the liquidity of the fund, and the investment strategy of the fund.

AUM Full form in different Indian languages

Here is a table with the full form of AUM in different Indian languages:

LanguageFull form of AUM
Hindiधन प्रबंधित अंश (Dhan Prabandhit Ansh)
Bengaliসম্পদ পরিচালিত অংশ (Sampad Porichalito Angsho)
Tamilசொத்து நிர்வகித் துணைக் கொள்கை (Sottu Nirvagith Thunaik Kolgai)
Teluguఆస్తి నిర్వహణ భాగం (Aasti Nirvahana Bhagam)
Kannadaಸಂಪತ್ತು ನಿರ್ವಹಿಸುವ ಭಾಗ (Sampattu Nirvahisuv Bhaga)
Malayalamആസ്തികളുടെ പ്രബന്ധം (Aasthikalude Prabandham)
Marathiधन प्रबंधित अंश (Dhan Prabandhit Ansh)
Gujaratiસંપત્તિ વ્યવસ્થાપન ભાગ (Sampatti Vyavasthapana Bhaga)
Punjabiਸੰਪਤੀ ਨੂੰ ਵਿਵਸਥਾ ਭਾਗ (Sampati Nu Vivastha Bhaga)
Urduدولت کے نگرانی کے تحت (Dolat Ke Nigrani Ke Tahaat)

I hope this table is helpful!

Top 10 fund house by AUM

Here are the top 10 fund houses in India based on their Assets Under Management (AUM) as of January 2023:

  1. HDFC Asset Management Company – AUM: Rs. 5.65 trillion
  2. ICICI Prudential Asset Management Company – AUM: Rs. 4.74 trillion
  3. SBI Funds Management Private Limited – AUM: Rs. 4.43 trillion
  4. Aditya Birla Sun Life AMC Limited – AUM: Rs. 3.81 trillion
  5. Nippon Life India Asset Management Limited – AUM: Rs. 3.08 trillion
  6. Axis Asset Management Company Limited – AUM: Rs. 2.44 trillion
  7. UTI Asset Management Company Limited – AUM: Rs. 2.19 trillion
  8. Kotak Mahindra Asset Management Company Limited – AUM: Rs. 2.18 trillion
  9. Franklin Templeton Asset Management (India) Private Limited – AUM: Rs. 1.33 trillion
  10. DSP Investment Managers Private Limited – AUM: Rs. 1.18 trillion

It is worth noting that AUM is not the only criteria for selecting the best fund house, as other factors such as performance, risk management, and customer service should also be considered before making investment decisions.

Top 10 mutual fund schemes by AUM

Here is a table with the top 10 mutual fund schemes in India based on their Assets Under Management (AUM) as of January 2023:

RankMutual Fund SchemeFund HouseAUM (in Rs. crore)
1HDFC Equity FundHDFC Asset Management Company Limited47,758
2ICICI Prudential Bluechip FundICICI Prudential Asset Management Company Ltd.41,348
3SBI Bluechip FundSBI Funds Management Private Limited37,985
4Mirae Asset Large Cap FundMirae Asset Mutual Fund35,756
5Axis Bluechip FundAxis Asset Management Company Limited33,325
6Aditya Birla Sun Life Frontline Equity FundAditya Birla Sun Life AMC Limited32,986
7HDFC Top 100 FundHDFC Asset Management Company Limited31,967
8Kotak Standard Multicap FundKotak Mahindra Asset Management Company Ltd.28,825
9SBI Focused Equity FundSBI Funds Management Private Limited28,725
10Nippon India Small Cap FundNippon Life India Asset Management Limited28,436

I hope this table is helpful!

AUM & Expense Ratio

Assets Under Management (AUM) and Expense Ratio are two important metrics in the mutual fund industry that investors should be aware of.

AUM refers to the total value of all assets that a mutual fund manages on behalf of its investors. This includes investments in stocks, bonds, and other securities. AUM is an important measure of the size and scale of a mutual fund, and can indicate its popularity and performance.

Expense Ratio, on the other hand, refers to the annual fees charged by a mutual fund to cover its operational expenses. These expenses can include management fees, administration costs, and other expenses. The expense ratio is expressed as a percentage of a fund’s average net assets, and is deducted from the returns generated by the fund.

There is often a correlation between AUM and Expense Ratio. Generally, larger mutual funds with higher AUMs have a lower expense ratio, due to economies of scale. This is because larger funds have more assets to spread the expenses over, resulting in a lower percentage cost for each investor. Smaller funds, on the other hand, may have a higher expense ratio, as they have fewer assets to cover their expenses.

However, it is important to note that a low expense ratio does not always indicate a better mutual fund. It is also important to consider other factors such as past performance, risk management, investment strategy, and the fund manager’s track record before making investment decisions.

In summary, AUM and Expense Ratio are two important metrics to consider when evaluating mutual funds. While a larger AUM can indicate a more popular and successful mutual fund, a lower expense ratio can lead to higher returns for investors. Investors should evaluate all relevant factors and consult with a financial advisor before making any investment decisions.

FAQs on AUM

What is AUM in mutual funds?

AUM, or Assets Under Management, is the total value of all assets that a mutual fund manages on behalf of its investors. This includes investments in stocks, bonds, and other securities.

Why is AUM important in mutual funds?

AUM is an important measure of the size and scale of a mutual fund. A larger AUM can indicate a more popular and successful mutual fund, with potentially greater resources and expertise to manage investments effectively.

How is AUM calculated in mutual funds?

AUM is calculated by adding up the total value of all assets held in a mutual fund’s portfolio. This includes stocks, bonds, cash, and other securities.

How does AUM affect mutual fund performance?

While AUM is an important factor in mutual fund performance, it is not the only factor to consider. A larger AUM may result in economies of scale and lower expenses, but it may also lead to a more limited investment universe and lower returns if the fund becomes too large to be nimble in the market.

Can AUM change in mutual funds?

Yes, AUM can change in mutual funds. It can increase or decrease depending on factors such as investment performance, inflows or outflows of investor money, and changes in the market.

Is it important to consider AUM when selecting a mutual fund?

While AUM can be an important factor to consider, it should not be the only factor. Other factors such as past performance, investment strategy, risk management, and the fund manager’s track record should also be considered when selecting a mutual fund.

Do all mutual funds disclose their AUM?

Yes, all mutual funds are required to disclose their AUM on a regular basis, typically on a monthly or quarterly basis. This information can be found in the fund’s prospectus or on the fund company’s website.

Can AUM be used to compare mutual funds?

Yes, AUM can be used as a metric to compare mutual funds. However, investors should be careful not to rely solely on AUM as a measure of a fund’s quality or performance, as there are many other factors to consider.

Conclusion

In summary, AUM is an important metric for mutual fund companies and investors alike. It is a measure of the total value of assets that a mutual fund company manages on behalf of its investors, and can be an indicator of the popularity, success, and liquidity of a mutual fund.

As an investor, it’s important to consider a mutual fund’s AUM when evaluating its suitability for your investment portfolio, as it can impact the fees you pay, the liquidity of the fund, and the investment strategy of the fund. Hope this article will help you understand the AUM full form and meaning.

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