Assets Under Management (AUM)

Definition

Assets under management (AUM) represents the total value of assets a manager controls or advises, typically measured at a point in time. In funds, AUM includes contributed capital plus unrealized gains (and may be net of losses), and can change due to performance, subscriptions/redemptions, capital calls, and distributions. AUM is a scale indicator, but it does not measure skill on its own. Allocator Context Allocators use AUM as a proxy for platform maturity, operational robustness, and capacity constraints. In some strategies, larger AUM can signal stability and better infrastructure; in others, it can create style drift or reduce opportunity set access. Emerging managers may have low AUM but strong edge; large platforms may have strong controls but reduced agility. Decision Authority AUM is rarely an approval criterion by itself, but it influences diligence and risk perceptions. Committees may require additional comfort for very small managers (operational resilience) or very large managers (capacity, alignment, bureaucracy). AUM can also affect portfolio construction limits, particularly concentration and counterparty exposure rules. Why It Matters for Fundraising Managers should position AUM honestly as context: where scale helps (institutional controls, sourcing breadth) and where it can hurt (capacity, agility). Overemphasizing AUM can backfire; allocators want to understand how scale impacts repeatability and risk, not just optics. Key Takeaways AUM measures scale, not skill Changes reflect both performance and flows Scale can improve infrastructure or reduce edge Fundraising depends on explaining capacity and resilience