What is AUM in Mutual Funds ?

When you research mutual funds, you often come across the term AUM. For new investors, this can sound technical, but it’s actually one of the most important indicators to evaluate a fund.

In this blog, we’ll break down what AUM means, why it matters, and how you can use it while selecting mutual funds. We’ll also explain how JM Financial Services can help you make better investment decisions.

What is AUM?

AUM stands for Assets Under Management. It represents the total market value of all the assets that a mutual fund manages on behalf of its investors.

For example, if 1,00,000 investors put money into a mutual fund scheme, the total value of those investments (after accounting for market fluctuations) is the AUM of that fund.

Why is AUM Important in Mutual Funds?

AUM helps investors understand the size and popularity of a mutual fund scheme. Here’s why it matters:

1. Indicates Fund Size – A higher AUM means the fund has attracted more investors and money.
2. Shows Investor Confidence – Large AUM reflects investor trust in the fund manager.
3. Liquidity – Funds with higher AUM generally offer better liquidity when investors buy or sell units.
4. Expense Ratio – Larger funds may have lower expense ratios due to economies of scale.
5. Fund Strategy – Some strategies work better in smaller AUM funds, while others require a larger corpus.

How to Use AUM in Fund Selection?

While AUM is an important factor, it should not be the only criterion. Here’s how you can use it effectively:

• For Equity Funds: Higher AUM usually indicates stability, but too large an AUM in small-cap or mid-cap funds may dilute performance.
• For Debt Funds: Higher AUM can mean better liquidity and stability.
• Compare Alongside Other Metrics: Always check fund performance, fund manager track record, expense ratio, and portfolio quality along with AUM.

JM Financial Services: Helping You Choose the Right Funds

At JM Financial Services, you get:

• Expert research reports to analyze mutual funds beyond just AUM.
• Personalized portfolio recommendations based on your risk profile and goals.
• Easy-to-use platforms like JM Pro App & web for mutual fund investments.
• Trusted guidance to build long-term wealth.

FAQs :-

Q1. Is higher AUM always better in mutual funds?
Not always. While higher AUM indicates popularity and trust, in categories like small-cap funds, too high an AUM can reduce performance flexibility.

Q2. How often does AUM change?
AUM changes daily as market prices fluctuate and investors buy or redeem units.

Q3. Does AUM affect mutual fund returns?
Indirectly, yes. While AUM itself doesn’t decide returns, fund size can impact flexibility, expense ratio, and liquidity.

Q4. Can I invest in low AUM mutual funds?
Yes, but ensure the fund has a good track record, skilled fund manager, and consistent performance.

Q5. How can JM Financial Services help me with AUM analysis?
JM Financial Services provides in-depth mutual fund analysis, helping you compare AUM with other key metrics to make the right investment choices.