Print Friendly, PDF & Email

What is asset under management (aum)?

Topics Covered: Indian economy related issues.

What is asset under management (aum)?


Context:

Heading for a contraction in the current fiscal, the first time in more than a decade, assets under management (AUM) of non-banking financial companies (NBFCs) are set to grow again at a relatively subdued 5-6% next fiscal.

  • The turnaround will be led by larger entities with stronger parentage.

Challenges ahead:

  • Despite an estimated GDP growth of 10% next fiscal, the overall NBFC sector growth is likely to be slower because access to funding remains a challenge due to concerns about the impact of the pandemic on asset quality.
  • Additionally, competition is expected to be more intense from banks which are flush with low-cost deposits and better placed with improved capital buffer than in the previous years.

What are Assets under management?

It measures the total market value of all the financial assets which a financial institution manages on behalf of its clients and themselves.

  • AUM is an indicator of the size and success of a given fund house.

InstaLinks:

Prelims Link:

  1. What is AUM?
  2. Components.
  3. Positive and negative AUM- impacts.
  4. What are NBFCs?
  5. Types of NBFCs.
  6. Banks vs NBFCs- similarities and differences.

Sources: the Hindu.