Assets Under Management

Assets under management, or AUM, is one of the most common measuring sticks in investment management. For an external manager — a hedge fund, a private equity firm, a registered investment advisor — AUM represents the pool of capital they are responsible for deploying and monitoring. For a family office investment program, AUM is the aggregate market value of everything the office oversees: public equities, bonds, real estate, private funds, cash, and any other holdings.

AUM matters to families for two practical reasons. First, many advisory and management fees are expressed as a percentage of AUM — so understanding the total figure helps families evaluate what they are paying and to whom. Second, AUM is a rough proxy for the complexity and cost of running an investment program. As a purely illustrative example, an office overseeing $500 million of diversified assets across public and private markets will require meaningfully more infrastructure than one overseeing $50 million in a handful of funds.

A common confusion is conflating AUM with net worth. AUM typically reflects gross asset values before subtracting liabilities like mortgages or margin loans. A family's true economic position is better captured by net worth — total assets minus total liabilities — which is a different calculation. See also net asset value, which applies a similar assets-minus-liabilities logic at the fund or entity level.