What is meant by Total aum investment ?
Before we discuss what is meant by Total AUM investment, we must first understand what AUM is so that in the future we can get a comprehensive understanding and picture because the term is related to investment activities in the capital market.
The term AUM is an abbreviation of Asset Under Management, which is one of the criteria or ideal options in the selection of an investment manager that needs to be considered to be taken into account in making investment decisions.
So from the brief description described above, what is meant by Total Investment AUM is the total market value or value of investment assets obtained and managed when investors entrust all their investments to investment managers where these terms and concepts refer to two things that are the focus and material. evaluation of investors, namely looking at the performance of investment managers’ abilities in managing total assets / total funds managed for certain clients or total assets managed for all clients.
This relates to how individuals, the public and potential investors can get an idea of credibility, experience and professionalism, as well as an overview of the capacity and capability of an investment manager to be able to manage deposited investment funds to produce the most optimal returns and relate to the level of individual trust in the community. and investors to the certainty and security of the funds they invest in.
The general parameter used by investment managers to calculate and accumulate the total AUM of this investment is by adding the cash component, nominal savings in the bank, and the total investment portfolio in calculating the rate of return or investment returns offered to clients or potential investors.
The assessment and evaluation activities carried out by investors for investment managers in calculating the Total AUM of this investment are one of the important indicators in investing in Mutual Funds, Venture Capital, individual investment managers and securities companies by measuring the age of the investment instruments offered, the Return Ratio and Level of Investment. risk, ease of investment facilities and services offered and also the amount of fee management value set.
So the total AUM of an investment is simply the amount of assets being managed by a party. The term Total Investment AUM is a term commonly used in mutual funds. Indeed, AUM itself can refer to various investment activities. For example, in the PAMM account service, a trader who receives investment funds from many investors and the total balance is $100K, we can say that the PAMM trader has an AUM of $100K. But again, although in principle it can be used in various types of investments, the term AUM is the most popular and widely used in mutual fund investments.
Total Assets Under Management is actually not an important parameter in the investment sector, because it is not directly related to the potential for fund growth and investment risk. But the total AUM of an investment is often an indicator that can attract potential investors at first glance. The problem is that in the general view of investors, the number of assets managed will be an illustration of the credibility and popularity of an investment manager in mutual funds. Usually, many investors sometimes look at the amount of funds under management of a mutual fund before finally moving on to analyzing other parameters.
Usually, the total AUM of the investment will be juxtaposed with the age of the mutual fund. Supposedly, a healthy mutual fund has a large total AUM investment if it has been around for a long time. For example, a 2 year old mutual fund with a total AUM of 10 billion might be understandable, but if a mutual fund is 10 years old and the total AUM investment is only 10 billion, many potential investors will wonder why at such an old age the amount of AUM is still like this, and often potential investors do not immediately glance at the mutual fund.
It may seem like us, if we choose a PAMM trader to invest our funds, if there are 2 PAMM traders with the same performance and the same PAMM account age, we will choose a PAMM trader with a larger amount of funds under management. The problem is that we become more convinced that PAMM traders with larger managed funds have better credibility and popularity, although this is not always the case.
So actually, in mutual fund investment, the main parameters are still fund growth, possible risks, and the reputation of the investment manager. I think it’s more important to pay attention to than the total AUM of the investment. Total AUM investment does not show the objective aspects of the mutual fund investment. But if needed, the total investment AUM indicator can be used as a benchmark for assessment if we find two mutual funds that are balanced in various ways and only differ in their total investment AUM.
Relationship between Total AUM Investment and Herding
Herding in the investment world is a term to indicate a phenomenon where investors tend to feel comfortable following other investors. It is human nature to always feel more secure when he is in the same line or group as other humans, and that also happens in investing. The consideration of total investment AUM as one of the benchmarks for selecting investment is also a manifestation of herding behavior in the investment world.
The greater the total AUM of a mutual fund investment, it means that more investors choose to invest in the mutual fund. So an investor will definitely be more psychologically comfortable to buy mutual funds with a high total AUM because he feels that he has many friends (other investors). This is also the reason why mutual funds usually like to emphasize the amount of their managed funds because they understand the phenomenon of herding behavior in investor behavior.
The importance of asset under management
Investing needs a good strategy so that the funds we invest are not easy to lose, but of course our goal is to make a profit, therefore asset under management can be used as a tool to determine how strong a company or investment manager is in managing the capital of investors. investors. For the investment manager himself, of course, this will be a very good attraction if the assets under management are in large numbers and for investors the value of the assets under management will be a benchmark or consideration for investing.
There are many types of investments managed by investment managers, namely mutual funds, venture capital, brokerage companies, individual investment managers, or in the form of portfolio managers.
