Assets under Management
Asset under management can be defined as the total market value of the investment of the company that is made by the company in the market and are managed through mutual funds, money management fund, portfolio management firms, hedge fund and other kind of financial management companies.
Working of Asset under Management
Assets under management are managed according to the flow of the money. The type and the style of the management depend upon the flow of money in and out of the company whose assets are under management. The asset under management theme of type also changes with the value of funds of the company whose assets are being managed.
Why the concept of Assets under Management is Important
There are two major and important reasons due to which the concept of asset under management must be understandable for the investors. The first reason is that the investor must know the fair and transparent disclosure of asset management company’s true performance over the time. This must be done because the asset management companies compare their asset management program with that of the competitor as the measure of the success of asset management. Accurate and transparent disclosure is important for measuring the performance of the asset management company.
The second reason for which the investor must have a fair disclosure of the performance of the asset management company is that many of the AUM companies require a management fees that is equal to a certain percentage of the assets being managed. So these percentages that will be paid as a fee to the management company makes it real important for the investors to understand how the asset management companies are managing the assets on the behalf of the investors.
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