Yes, AUM can fluctuate based on market performance and client inflows or outflows.

Exploring Asset Under Management [AUM]: Legal Insights and Definitions

Q: How is AUM calculated?

AUM is calculated by summing the market value of all client assets managed by the firm, excluding any assets owned by the firm itself.

Q: Why is AUM important?

AUM is important as it indicates the size and success of a financial institution, affecting its fees and reputation.

Definition & Meaning

Assets under management (AUM) refers to the total market value of assets that a financial institution, such as an investment adviser or a bank, manages on behalf of clients. This term is commonly used in the financial services industry, including mutual funds, hedge funds, and wealth management. AUM can be seen as a measure of a firm's size and success, similar to how a bank measures its deposits. It typically excludes assets owned by the firm itself.

Table of content

Legal Use & context

AUM is relevant in various legal contexts, particularly in investment management and financial regulation. It plays a crucial role in:

Determining fees charged by investment advisers.
Assessing compliance with regulatory requirements.
Evaluating the performance of investment products.

Users may find legal templates helpful for managing AUM-related documents, such as investment agreements or advisory contracts, which can be accessed through platforms like US Legal Forms.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A wealth management firm reports $500 million in AUM, which includes investments from individual clients but excludes its own assets. This figure helps potential clients assess the firm's size and credibility.

Example 2: A hedge fund manages $1 billion in AUM, and its performance is evaluated based on the returns generated for its clients relative to the AUM. (hypothetical example)

Comparison with related terms

Term	Description	Difference
Assets Under Management (AUM)	Total market value of assets managed for clients.	Focuses on client assets, excluding firm-owned assets.
Assets Managed	Similar to AUM but may include firm-owned assets.	Broader definition that can mislead regarding firm size.
Investment Advisory Fee	Fees charged based on AUM.	Related to AUM, but specifically refers to the cost of services.

Common misunderstandings

What to do if this term applies to you

If you are considering investing with a firm, inquire about their AUM to gauge their experience and credibility. Review the firm's fee structure, which is often based on AUM. For assistance with investment agreements or understanding your rights, consider using US Legal Forms for ready-to-use legal templates. If your situation is complex, consulting a legal professional is advisable.

Find the legal form that fits your case

Browse our library of 85,000+ state-specific legal templates.

This field is required

Quick facts

Attribute	Details
Typical Fees	Varies by firm, often a percentage of AUM.
Jurisdiction	Applicable nationwide in the U.S.
Possible Penalties	Fines for misreporting AUM or failing to comply with regulations.

Key takeaways

Frequently asked questions

What does AUM stand for?

AUM stands for assets under management, which refers to the total market value of assets managed by a financial institution on behalf of clients.