AUM, or Assets Under Management, in mutual funds refers to the total market value of all the investments managed by a mutual fund company. It shows the size of the fund and how much money investors have put into it. A higher AUM often indicates that the fund is trusted by many investors and has more resources to invest effectively.
How is AUM Calculated?
AUM is calculated by adding the total value of all the investments held by the mutual fund. This includes stocks, bonds, cash, and other securities. For example, if a fund has ₹50 crore in stocks, ₹20 crore in bonds, and ₹5 crore in cash, its AUM will be ₹75 crore. This number changes daily as the market value of the investments changes.
Why is AUM Important for Investors?
AUM indicates the size and popularity of a mutual fund. A larger AUM can mean more stability and better resources to manage investments. It also helps investors compare different funds and make informed decisions. However, a very large AUM may make it harder for the fund to grow quickly, so investors should consider both AUM and performance.
Does AUM Affect Mutual Fund Returns?
AUM does not directly determine returns, but it can influence fund management. Funds with moderate AUM can be more flexible in making investments, while very large funds may face challenges in quickly buying or selling stocks. Investors should look at historical returns, expense ratio, and fund strategy along with AUM before investing.
How to Track AUM of a Mutual Fund?
You can track AUM on mutual fund websites, broker platforms, or financial news portals. The AUM value is updated daily based on market movements. Tracking AUM helps you monitor fund growth and decide when to invest or redeem your units.
Tips for Choosing Funds Based on AUM
1. Look for funds with consistent AUM growth.
2. Compare AUM with historical returns.
3. Avoid extremely small funds unless you are comfortable with higher risk.
4. Consider moderate-sized funds for flexibility.
5. Always check fund strategy, expense ratio, and performance along with AUM.
Following these tips helps you make smart investment decisions.
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