Assets Under Management (AUM)

Assets Under Management (AUM)The term "assets under management" refers to the entirety of the assets under the management of a financial service provider. These include investments managed through both discretionary and advisory asset management. Simply put, AUM is the money controlled by third parties.

What Are Assets Under Management (AUM)?

Definitions and formulas for calculating the AUM vary by company and by the purpose of reporting. In general, AUM is a financial indicator that evaluates investment companies, insurance companies, asset management companies, and banks. The AUM describes the volume of customer funds that the respective financial company manages and thus, among other things, provides information on the size and market penetration of financial companies. That's why it is typically ranked in the largest companies in the financial industry.

However, the assets under management do not reflect the sales success of a financial service provider. To evaluate the sales success, the net inflow of customer deposits is the better indicator. This is because the AUM automatically drops in the case of negative market trends and automatically rises in the case of positive market trends.

Assets under management always include funds with which the manager can make transactions without consulting the investor. For example, if you have $50,000 in your managed portfolio, the manager will use your investment to buy and sell securities without obtaining your permission.

Many investment companies charge management fees, which represent a fixed percentage of the assets under management. This fee is charged to the entire fund and allocated proportionately to each investor.

Assets Under Management vs. Assets Under Administration

In the case of assets under administration, the financial company only performs administrative tasks and does not make complex investment decisions for customers, as in the case of AUM. Banks generally classify both classes as assets under management and administration. Therefore, they speak of "supervised assets" and not "managed assets".

How to Calculate

The flow of investor money in and out of a specific fund, as well as the asset performance, impacts the AUM. It grows with capital appreciation, increased investor flows, and reinvested dividends. On the contrary, market value losses, fund closures, client redemptions, and decreased investor flows lower the assets under management. In the United States, when a company has over $30 million in AUM, it must register with the SEC.

AUM calculation methods vary among companies. Assets under management can either include all of the capital invested across all of the company's products or be limited by the capital owned by the investment company executives.

The calculation of AUM is based on the current market value of a portfolio, i.e. the total value of each asset in the portfolio. The value of an asset equals the number of assets in the portfolio multiplied by the most recent market price. For example, if a portfolio contains 250 units of Apple shares trading at $110, the value of Apple shares will be $250 or $27,500. After you make this calculation for each asset in the portfolio, you should add the numbers to reach the portfolio value. Finally, all the values of all qualifying portfolios are added together to determine the AUM.


The CFA (Chartered Financial Analyst) Institute has established a set of standards called the Global Investment Performance Standards (GIPS), which the asset management firms must comply with. The GIPS requires that the management companies consider the portfolios and investments controlled by a third party on behalf of the asset management company when calculating AUM. The key idea is that the investor has the right to get transparent and fair disclosure about an asset manager's true performance over time.

Exchange Traded Funds with Largest AUM

Currently, the following S&P 500 exchange traded funds (ETFs) have the largest AUM:


  • Issuer: State Street Global Advisors

  • AUM: $274.95 trillion

  • Annual profitability: 9.71%

  • Cost ratio: 0.09%

Although, strictly speaking, it is not an ETF (SPY is a mutual investment trust, which is usually more tax efficient than managed funds), it is the oldest of the funds tracking the S&P 500 and is by far the largest in terms of assets under management. SPY is also very cheap - the expense ratio is only 9 basis points and very clearly tracks the result of the base index.

In addition, the fund has high liquidity - the average daily trading volume is almost 16 billion, which makes it attractive as a tactical trading tool. Yield for the annual, 3-year and 5-year period is stable, with an increase of 19.49%, 15.98%, and 14.39%, respectively.

iShares Core S&P 500 ETF (IVV)

  • Issuer: BlackRock

  • AUM: $164.45 trillion

  • Annual profitability: 9.79%

  • Cost ratio: 0.04%

The fund ensures strict compliance with the performance of the base index at very low investment costs. Of course, IVV is far from SPY in terms of volume, but it can offer liquidity to all classes of investors, with more than 850 million shares participating in the trading process daily. In addition, this is a real ETF, which means that it avoids the monetary resistance inherent in an investment trust such as SPY. Yield for the annual, 3-year and 5-year period is stable, with an increase of 19.65%, 16.09%, and 14.49%, respectively.

Vanguard S&P 500 ETF (VOO)

  • Issuer: Vanguard

  • AUM: $105.82 trillion

  • Annual profitability of 2018: 9.73%

  • Cost ratio: 0.04%

Like its counterparts, VOO is characterized by low costs and high liquidity, and also covers investments in large-scale capitalization that are expected in the S&P 500 tracking fund.

At the same time, although the differences may be minor, they sometimes turn out to be fundamental. Thus, VOO discloses data on its investments on a monthly basis, rather than daily, as an IVV, which is a slight shortcoming in terms of transparency. And VOO, unlike SPY, reinvests the intermediate money received. The yield of the fund is stable during the annual, 3-year and 5-year periods with an increase of 19.59%, 16.09%, and 14.51%, respectively.