AUM
Definition
Assets Under Management (AUM) is the total market value of all investments managed by a mutual fund, AMC (Asset Management Company), or financial institution on behalf of its clients. AUM = NAV × Total Outstanding Units. It fluctuates daily with market movements, fresh investments (inflows), and redemptions (outflows). In India, SEBI links the permissible expense ratio (TER) to AUM — larger funds must charge lower fees. As of 2024, the Indian mutual fund industry's total AUM exceeds ₹66 lakh crore.
Why is AUM Important?
In the context of wealth creation and investing in India, AUM is a fundamental concept. Whether you are investing in mutual funds via SIPs, fixed deposits, or retirement schemes like PPF and NPS, this metric helps evaluate potential returns and risks. The power of compounding and market volatility make it essential to track this indicator for any long-term portfolio.
Investors are encouraged to use specific investment calculators to project the future value of their corpus. Understanding this term enables better asset allocation, inflation protection, and consistent progress toward your ultimate financial goals.
What is AUM (Assets Under Management)?
Assets Under Management (AUM) represents the total market value of all investments that a mutual fund, AMC (Asset Management Company), or investment manager handles on behalf of its investors. Think of it as the total pool of money entrusted to the fund.
AUM is a dynamic figure — it changes daily based on:
- Market performance — Rising markets increase AUM; falling markets decrease it
- Inflows — New investments from SIPs and lump sums add to AUM
- Outflows — Redemptions by investors reduce AUM
- Dividends/IDCW — Payouts reduce the fund's AUM
How AUM is Calculated
Formula: AUM = NAV × Total Outstanding Units
| Component | Meaning | Example |
|---|---|---|
| NAV | Net Asset Value — the per-unit price of the fund | ₹45.20 |
| Outstanding Units | Total number of units held by all investors | 10,00,00,000 (10 crore units) |
| AUM | Total value of assets managed | ₹45.20 × 10 Cr = ₹452 Crore |
AUM vs NAV — Key Differences
| Aspect | AUM | NAV |
|---|---|---|
| What it measures | Total size of the fund | Per-unit price of the fund |
| Formula | NAV × Total Outstanding Units | (Total Assets − Liabilities) ÷ Outstanding Units |
| Unit | Expressed in ₹ Crore or ₹ Lakh Crore | Expressed as ₹ per unit (e.g., ₹45.20) |
| Indicates | Fund's scale, investor confidence, liquidity | Fund's current value per unit |
| Impact of new investment | Increases (more money in the fund) | No change (units are created proportionally) |
| Impact of market rise | Increases | Increases |
SEBI Expense Ratio (TER) Slabs by AUM
SEBI mandates that funds with higher AUM must charge lower fees. This directly benefits investors in large funds:
| AUM Slab | Max TER — Equity Funds | Max TER — Debt Funds |
|---|---|---|
| First ₹500 Cr | 2.25% | 2.00% |
| ₹500 – ₹750 Cr | 2.00% | 1.75% |
| ₹750 – ₹2,000 Cr | 1.75% | 1.50% |
| ₹2,000 – ₹5,000 Cr | 1.60% | 1.35% |
| ₹5,000 – ₹10,000 Cr | 1.50% | 1.25% |
| ₹10,000 – ₹50,000 Cr | TER reduces further (slab-wise) | TER reduces further |
| Above ₹50,000 Cr | 1.05% | 0.80% |
Source: SEBI Circular on TER (Regulation 52 of MF Regulations). Lower TER means more of your returns stay with you.
Top 10 Indian AMCs by AUM (2024)
| Rank | AMC | AUM (₹ Lakh Cr) | Key Fund Category |
|---|---|---|---|
| 1 | SBI Mutual Fund | ~₹10.30 | Multi-cap, Large-cap |
| 2 | ICICI Prudential MF | ~₹8.60 | Balanced Advantage, Value |
| 3 | HDFC Mutual Fund | ~₹7.50 | Flexi-cap, Mid-cap |
| 4 | Nippon India MF | ~₹5.30 | Small-cap, Index |
| 5 | Kotak Mahindra MF | ~₹4.80 | Flexi-cap, Debt |
| 6 | Axis Mutual Fund | ~₹3.10 | Large-cap, ELSS |
| 7 | Aditya Birla Sun Life MF | ~₹3.50 | Corporate Bond, Medium Duration |
| 8 | UTI Mutual Fund | ~₹3.00 | Nifty Index, Flexi-cap |
| 9 | DSP Mutual Fund | ~₹1.70 | Mid-cap, Small-cap |
| 10 | Mirae Asset MF | ~₹1.90 | Large-cap, Emerging Bluechip |
AUM figures are approximate as of late 2024. Rankings may vary monthly based on market movements and inflows.
Indian MF Industry AUM Growth
| Year | Total Industry AUM | Growth |
|---|---|---|
| August 2013 | ₹7.66 Lakh Cr | — |
| August 2016 | ₹15.63 Lakh Cr | 2× in 3 years |
| August 2019 | ₹25.47 Lakh Cr | 3.3× in 6 years |
| August 2021 | ₹36.59 Lakh Cr | 4.8× in 8 years |
| August 2023 | ₹46.63 Lakh Cr | 6× in 10 years |
| November 2024 | ₹66.93 Lakh Cr | 8.7× in 11 years |
Key insight: The Indian mutual fund industry has grown 8.7× in just 11 years — from ₹7.66 lakh crore to ₹66.93 lakh crore. SIP contributions alone exceed ₹25,000 crore per month as of 2024.
Does High AUM Mean Better Returns?
Not necessarily. While high AUM indicates investor confidence and operational stability, it does not guarantee superior returns. Here's what to consider:
- Advantages of high AUM: Lower expense ratio, better liquidity, ability to diversify broadly, lower redemption pressure during market crashes
- Disadvantages of high AUM: Large funds may struggle to deploy capital efficiently in mid-cap/small-cap stocks (market impact cost), may become index-like in performance, less agility in portfolio changes
- Ideal AUM range: For large-cap funds, high AUM (₹10,000+ Cr) is fine. For mid-cap and small-cap funds, very high AUM (₹30,000+ Cr) can reduce outperformance potential
How to Use AUM When Selecting Funds
- Don't invest solely based on AUM — A ₹1 lakh crore fund isn't automatically better than a ₹5,000 crore fund
- Check AUM alongside TER — Higher AUM should translate to lower expense ratio. If not, the fund may be overcharging
- Compare within category — Compare AUM of similar funds (e.g., flexi-cap vs flexi-cap), not across categories
- Watch for very low AUM — Funds with AUM below ₹100 crore may have liquidity issues and could be at risk of merger or closure
- Track AUM trend — Consistently declining AUM despite rising markets may signal investor dissatisfaction
- For index funds — AUM matters less since the fund simply tracks the index. Focus on TER and tracking error instead