How is AUM computed?

How is a fund's AUM computed? I was confused while seeing the net assets of Reliance Tax Saver scheme for the month ending March 2008. The net assets came down from around Rs. 2111 crore in Feb-08 to around Rs. 1882 crore in Mar-08. This being a tax saving fund wherein redemptions are not allowed before the stipulated three year lock in period, how did the fund's size shrink?
-Achanta Krishnasarma

The fund's AUM are declared once every month. It is the total value of the portfolio that the fund is invested in on that particular day. In simple terms it is the total of NAV multiplied with total number of units. Hence the AUM fluctuates with the changing NAV, redemptions and even additional purchases done. In March, Reliance Tax Saver was amongst the worst performing tax saving funds with 15.54 per cent retruns during the month. Consequently, as its asset value declined, its AUM also declined by a similar percentage from Rs 2111 crore to levels of Rs 1882 crore. Such fluctuations might be more drastic if a fund faces redemption pressure during such a phase of decline. As the fund completes its three years in Sepetember 2008, it would be open for redemption for investors who had invested initially.

This article was originally published on June 06, 2008.