Assets like a house? or money you can use to trade?
In: Mathematics
A terribly abiguous term. I wish people would use NAV (Net Asset Value) instead.
USSUALLY when causally talking people use the term AUM (Assets Under Management) they mean “The net amount of money currently controlled by the manager, on behalf of clients.”
So if you had 50 clients each give you 100,000 last year, and you had a performance of 10%, and you aren’t charging fees, your current AUM would be something like: $5.5Million.
Where it get tricky, and NAV is a clearer term is when you involve leverage.
Lets say you are a hedge fund, and you TYPICALLY hold 2x long 2x short and 1x cash.
So in the above scenario, you hold $11million in equity, have $5.5 million in cash, and owe $11million is other equities.
You have positive assets of $16.5 million, and negative assets (liabilities/debt) of $11million.
MOST finance people would use AUM, in that case, and still mean the Net $5.5 Million. Many regulators would be all over the board on if you had $16.5 (positive assets), $22 (the absolute value of all exposure), 27.5, (the absolute value of all HOLDINGS) or some other number depending on if any of those holdings were in derivatives.
NAV is not ambiguous, this way.
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