What happens if AUM high?

What happens if AUM high?

AUM as a factor of Mutual Fund Investment Funds with higher AUM can typically have higher market trading volumes which positively influence the liquidity of a fund. Mutual fund investors often look at the fund’s AUM and get impressed if it is on the higher side.

What is the impact of AUM in mutual fund?

Sometimes, an equity fund’s bloating AUM can affect its performance negatively. Nevertheless, there is practically no evidence to indicate that a higher AUM affects the fund performance adversely or aids it. It is the fund manager who should grasp the market opportunities – enter or exit a stock at the ‘right’ time.

Does fund size affect performance?

As fund size grows, performance suffers. As small-cap funds grow, their performance suffers proportionally more than that of large-cap funds. Liquidity affects small-cap funds about the same as large-cap funds, but large-sized small-cap funds fare worse than smaller small-cap funds.

What does high AUM mean?

Understanding Assets Under Management AUM is an indicator of mutual fund performance as well as its size. An increasing AUM may indicate positive fund performance or new customers who have brought in additional funds to be invested or both.

Why is AUM important?

Why AUM Matters AUM can help investors get an indication of the size of a company’s operations relative to its competitors. AUM may also be an important consideration for the calculation of fees. Many investment products charge management fees that are a fixed percentage of assets under management.

Is AUM important for ETF?

The best ETFs most often have the highest assets under management (AUM). They will also have a higher trading volume, which cuts down on the spread between the asking price and the buying price. Also, a higher AUM indicates a higher quality fund with a long track record.

Is large AUM good or bad?

A fund with a large AUM signifies higher participation from investors and a fund with low AUM signifies lower interest in that fund. Though a fund with a large AUM might not be the best choice always, there could be funds with lower AUMs but with better track records and risk/return metrics.

Does Aum affect the ability of a fund manager to manage?

But the AUM can also increase when the value of the investments made by the fund manager grows. Conversely, when investors withdraw money and/or when the market goes down, the AUM of a fund goes down. As AUM increases (or decreases), the question is whether it impacts the ability of a fund manager to manage the fund.

Is there such a thing as optimal AUM for mid-cap funds?

When you see a mid or small cap fund slowly deploying more in large cap than they were earlier, it is a warning sign that they are unable to plough the money easily in smaller companies for fear of higher impact cost. These are the signs we watch for. There is no such thing as optimal AUM.

Which is the best Bluechip mutual fund with large Aum?

Mirae Asset Emerging Bluechip has the largest AUM in the large and midcap category (despite restricting flows) and still does very well. Axis Bluechip has about Rs 16,000 crore of AUM and is among the top in the large cap equity fund category.

How many equity-oriented schemes in India have AUM over Rs 10000 crore?

First, only 26 of the around 430 equity-oriented schemes have AUM of over Rs 10,000 crore. Take SBI, which is the largest AMC by assets. In the equity-oriented space (other than ETFs), the fund house has just 1 hybrid scheme (SBI Equity Hybrid) and 1 equity scheme (SBI Bluechip) with over Rs 20,000 crore of AUM.