UK Accounting Glossary
An important measure of the size of a fund or group of funds is assets under management. Assets under management equals the market value of portfolio assets owned by investors. Assets under management typically excludes assets of the fund principals. Assets under management is therefore somewhat like the amount of deposits held by a bank. For the smallest funds, assets under management could be under $10 million. For large pension funds, some mutual funds, and the very largest hedge funds, assets under management can exceed $10 billion. Therefore, for any fund that receives fees proportional to assets under management, the higher the asset base, the greater revenue from fees. For the hedge fund, assets under management is also a quick indicator of exclusivity because the greater the assets under management, the higher the minimum investment tends to be.
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This glossary post was last updated: 4th February 2020.