Assets Under Management (AUM) and Total Assets are two terms that frequently appear when evaluating an investment company, a mutual fund, or even personal financial health. While they may sound similar, these metrics serve very different purposes in financial analysis. Understanding the difference between them is essential for investors, fund managers, and anyone looking to assess financial strength, scalability, and performance.
Let us break it down and understand why both metrics matter.
What Are Assets Under Management (AUM)?
Assets under management (AUM) are the total market value of investments managed by a portfolio manager or investment company on behalf of clients. It represents the total pool of money invested and overseen by the manager.
On an individual level, personal AUM refers to the value of investments managed for you by a financial advisor. In mutual funds and ETFs, AUM shows the total amount invested by all investors in the fund.
Investors often consider AUM while selecting a fund or investment company, as it reflects the size and scale of operations. The method of calculating AUM may vary, with some institutions including cash and deposits, while others count only assets under active management. AUM also influences investment access and the level of services offered to investors.
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Examples of AUM in Various Industries
In the banking sector, loans given to customers generate interest income. These loans form part of the bank’s asset base and contribute to the assets it manages.
Asset Management Companies collect money from investors and invest it across equities, bonds, gold, and government securities. The total value of these investments managed on behalf of clients represents the company’s AUM.
Insurance companies treat premiums collected from policyholders as assets. These funds are invested to earn returns through interest, dividends, and capital gains.
Across industries, AUM refers to the total value of funds or assets that institutions manage for clients with the objective of generating returns.
How to Calculate AUM?
The calculation of assets under management depends on investor inflows and outflows and changes in market value. Since asset prices move daily and investors regularly add or withdraw money, AUM keeps fluctuating.
A fund’s AUM increases when investments perform well, asset values rise, dividends are reinvested, or new investors bring in fresh money. On the other hand, AUM falls when markets decline, investors redeem their investments, or funds are closed.
To calculate AUM, an investment manager first identifies all assets managed on behalf of clients, such as stocks, bonds, mutual funds, ETFs, and cash equivalents. Each asset is then valued using current market prices or fair values, including any required currency adjustments. The total of these values gives the fund’s AUM.
Formula: AUM = Market value of all client-managed assets
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What Is Asset Under Management in Mutual Fund?
Asset Under Management in a mutual fund refers to the total market value of investments held by the fund. It includes both the capital invested by investors and the fund’s current value of assets.
For example, as of September 30, 2025, the total mutual fund quarterly average assets under management (QAAUM) of ICICI Prudential Asset Management Company Limited stood at Rs 10,147.6 billion, as mentioned in the RHP.
Fund houses manage the AUM, while fund managers make investment decisions to improve performance and generate returns. AUM is often used to understand the size and scale of a mutual fund and the overall experience of the fund house.
The value of AUM includes investments, bank deposits, and cash reserves held by the fund. A higher AUM generally reflects strong investor inflows and confidence in the fund’s management. Fund management fees are also commonly calculated as a percentage of AUM.
AUM changes on a daily basis due to market movements and investor inflows or withdrawals. Mutual funds with larger AUMs are usually more liquid, making it easier for investors to enter or exit the fund.
Importance of AUM in Mutual Funds
Assets under management play an important role in understanding a mutual fund’s position and performance. AUM clearly reflects the size and scale of a fund. A higher AUM usually indicates strong investor trust and a well-established presence in the market.
AUM can also influence a fund’s overall performance. Very large funds may find it difficult to generate high returns, as deploying large amounts of money without affecting market prices can be challenging. Smaller funds, on the other hand, often have greater flexibility to explore investment opportunities and may deliver higher returns.
In addition, AUM affects the cost of investing in a mutual fund. Management fees are usually linked to AUM, and some large funds may require higher minimum investments. This can impact affordability and accessibility for certain investors.
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What Are Total Assets?
Total assets refer to the combined book value of everything owned by an individual, company, or organisation. This includes all physical, financial, and intangible assets recorded on the balance sheet.
For companies, total assets are calculated after adjusting for depreciation, which reflects the reduced value of assets over time. Total assets are commonly used to assess net worth and are often referenced in debt agreements and financial covenants.
In simple terms, net worth is derived by subtracting total liabilities from total assets, making total assets a key measure of overall financial strength.
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What Do Total Assets Indicate?
Total assets help in understanding the size and financial strength of a company. They offer useful insights into different aspects of a business.
Company size: Higher total assets usually indicate a larger company with wider business operations and a stronger market presence.
Financial stability: Changes in total assets over time reflect whether a company is growing or shrinking. An increase often signals expansion and new investments, while a decline may point to asset sales or financial stress.
Debt position: Total assets help assess how much debt a company carries compared to what it owns. A high debt share may suggest higher risk, while a stronger equity base indicates better financial health.
Comparability: Total assets allow investors to compare companies within the same industry. This helps in evaluating relative strength and efficiency, keeping in mind differences in accounting practices.
Regulatory relevance: Total assets are used in regulatory reporting and audits. They can determine whether a company falls under specific legal or compliance requirements.
Overall, total assets provide a clear picture of a company’s financial resources and support better financial analysis and decision-making.
How to Calculate Total Assets?
Total assets represent the combined value of everything you own that has financial value. Calculating total assets is straightforward and follows a simple structure.
To calculate total assets, add the values of current assets, long-term assets, and intangible assets.
Total Assets = Current Assets + Long Term Assets + Intangible Assets
This formula provides a clear snapshot of overall asset value at a given point in time.
How to Calculate Your Total Assets and Find Your Net Worth
Once you know your total assets, you are halfway to calculating your net worth. The remaining steps focus on identifying what you owe and putting the numbers together in a clear format.
List all your assets: Start by writing down everything you own that has value, such as cash, investments, property, and other valuables. This step may take time, as asset values can change due to market movements or regular cash inflows and outflows. Asset values need to be updated whenever you want an accurate net worth figure.
Identify your liabilities: Next, list all your debts, including home loans, car loans, education loans, and credit card dues. Do not include regular expenses like bills or daily spending. The focus here is only on outstanding amounts you owe.
Prepare a personal balance sheet: Finally, compare your total assets with your total liabilities in a simple balance sheet. Subtracting liabilities from assets gives your net worth. Since this is a snapshot at a specific time, it needs to be reviewed and updated regularly, especially if you hold multiple or volatile investments.
Difference Between AUM and Total Assets
Wrapping Up
AUM and total assets may sound similar, but they serve very different purposes in financial analysis. AUM reflects the value of assets managed on behalf of investors and helps measure the scale, trust, and reach of an investment manager or fund house. Total assets, on the other hand, represent what an individual or company actually owns and are used to assess financial strength and net worth. Understanding this distinction allows investors to evaluate mutual funds, financial institutions, and personal finances more accurately and make better-informed investment decisions.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
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