The calculation of asset under management (AUM) involves adding up the total value of all the assets that a financial institution manages on behalf of its clients. The following steps are typically involved in calculating AUM:
- Identify all the assets managed by the financial institution, such as stocks, bonds, mutual funds, real estate, and other investments.
- Determine the market value of each asset at a particular point in time, typically the end of a quarter or fiscal year.
- Add up the market value of all the assets to get the total AUM for the financial institution.
For example, if a mutual fund company manages 100 different mutual funds, it would calculate its AUM by adding up the market value of all the assets held in each of those funds. If the total market value of all the assets is $1 billion, then the AUM for that mutual fund company is $1 billion.
It’s important to note that AUM can fluctuate over time due to changes in the value of the underlying assets, as well as the addition or withdrawal of clients’ investments.