What does AUM stand for in finance?

AUM stands for Assets Under Management, which represents the total market value of all financial assets managed by a person or financial institution on behalf of their clients.

Why is AUM growth considered a key indicator for financial firms?

AUM growth signifies a firm's ability to attract and retain investor capital, often indicating strong investment performance, client trust, and effective marketing strategies. It directly impacts revenue generation through management fees.

What factors primarily contribute to AUM growth?

AUM growth is typically driven by two main factors: market appreciation of existing assets and net new asset inflows (new investments minus client redemptions). Mergers and acquisitions can also contribute significantly.

How is AUM growth typically measured?

AUM growth is usually measured as a percentage change over a specific period (e.g., quarter-over-quarter or year-over-year). It's calculated by comparing the AUM at the end of the period to the AUM at the beginning.

Can AUM growth be negative, and what does that mean?

Yes, AUM growth can be negative, meaning AUM has declined. This typically results from market depreciation of existing assets or significant net outflows (more client redemptions than new investments), impacting a firm's profitability.