Assets under Management (AUM)
What is AUM?
Assets under Management (AUM) refers to the total value of investments held within an Exchange-Traded Fund (ETF) portfolio. It represents the combined worth of all the underlying assets, such as stocks, bonds, commodities, or other securities, that the ETF holds on behalf of its investors.
How is AUM Calculated?
AUM is calculated by summing the market values of all the individual securities held within the ETF’s portfolio. This includes the prices of shares, bonds, or other assets, multiplied by the number of units or shares of each asset held by the ETF. The total value gives a snapshot of the financial size and scale of the ETF.
Why is AUM important?
AUM is an essential metric for investors because it provides insights into an ETF’s size, popularity, and potential liquidity. A higher AUM often indicates that more investors have invested in the ETF, potentially signifying its appeal and reliability. Larger AUM might also suggest that the ETF is well-established and has a track record in the market.