Assets Under Management (AUM)

Allocator relevance: Signals scale and operational maturity but also raises questions about capacity, deployment pace, and discipline.

Expanded Definition

AUM can be reported at the firm level, strategy level, or vehicle level and may differ from committed capital in private funds. In private markets, NAV and unfunded commitments often provide more actionable context than headline AUM.

AUM is informative when tied to capacity: how much capital can be deployed without weakening underwriting standards or increasing concentration risk.

How It Works in Practice

Allocators use AUM to evaluate whether a manager is too small (key person risk) or too large (capacity constraints). They also look at AUM growth rate and whether process and team scaled alongside assets.

Decision Authority and Governance

AUM expansion can pressure deployment pace and increase risk of style drift. Governance, underwriting standards, and investment committee discipline are critical to maintain strategy integrity as capital scales.

Common Misconceptions

• Higher AUM always means lower risk.
• AUM equals deployable capacity.
• AUM growth implies performance quality.

Key Takeaways

• AUM is context-dependent and should be scoped (firm vs strategy).
• Capacity and deployment pace matter as much as size.
• Scaling without process discipline can degrade returns.