What is AUM and should you check it before investing?

Summary: Before investing in a mutual fund, we typically consider factors such as the expense ratio, past performance and net asset value. However, there’s another factor that is equally important – AUM. Here’s how it can impact your fund’s returns. Mutual funds can invest in a variety of asset classes – stocks, bonds, commodities, etc, based on their fund mandate. The total value of all these investments, along with any cash the fund might keep in reserve, forms the assets under management or AUM. The AUM can change only due to two reasons: If people invest more in the fund or exit it. If the value of the underlying assets rises or declines. If we go by this logic, the better a fund performs, the more people will invest in it. This leads many investors to believe that a larger fund is a consistent performer. Kind of like how more people bet on the best horse at the start of a race. And they believe it will maintain its performance because: A fund with a large AUM can devote more resources to investment research. This works in favour of investors. The expense ratio of larger mutual funds ten

This article was originally published on June 28, 2022, and last updated on December 02, 2025.