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Beginner Level Reading
30 May, 2024

Assets Under Management

[ As-ets uhn-der man-ij-muhnt ]

Assets under management are the total market value of assets held in a company or fund by clients.

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Shawn Munir
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Shawn Munir is the CEO of Coinweb.com and spearheads all the collaborative partnerships for the platform. He bought his first Bitcoin in 2017 and never looked back. He is also an investor in 200+ Web3 startups and is considered an expert in the field. Before building Coinweb with his co-founders, he co-founded Presail, a management...
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What Is Assets Under Management (AUM) 

The (AUM) assets under management definition is the total market value of all assets held by asset management companies on behalf of their clients.

Binance AUM history
Example: Binance AUM history | Source: Binance.com

The AUM indicates the company’s size and the investor’s confidence in it, which makes it a key performance indicator (KPI) of success. Rising AUMs for multiple leading companies might indicate that larger investors are joining the market, which will soon reflect in cryptocurrency prices.

The AUM finance meaning is relative to the type of company being measured:

  • Centralized Exchanges, CEXs (example: Binance)
  • Crypto hedge funds (example: Pantera Capital)
  • Venture capital firms (example: Digital Currency Group)
  • Exchange-Traded Funds, ETFs (example: Grayscale Bitcoin Trust)
  • Decentralized Exchanges DEXs (example: Uniswap)

Usually, the assets under management are limited to the context of hedge funds, firms, and ETFs. Instead, CEXs mention it as “user funds under management” to measure the users’ confidence in their management ability.

As for DEXs, the equivalent metric is the Total Value Locked (TVL), the amount of user tokens temporarily deposited on smart contracts (in exchange for interest or services).

Uniswap v3 TVL
Example of the Uniswap v3 TVL | Source: Defillama.com

How to Calculate Assets Under Management? 

How to calculate AUM:

  1. Find or calculate the total amount held of an asset (total net inflow)
  2. Apply the asset’s price change to the total amount managed (ROI)

For example: The latest AUM reported by a Bitcoin ETF is $100M. Since that date, the price of Bitcoin has increased by 20%. Assuming there were no inflows or outflows, the up-to-date AUM is $120M.

Funds that combine various cryptocurrencies usually show the final index price, so it’s not necessary to calculate each token separately.

How to find assets under management: Search for the fund name symbol in analysis platforms such as TradingView. It will appear in the details, also called “total assets” or “net assets” (same as the AUM meaning).

Measuring Success: The Role of Assets Under Management 

While high AUM is correlated with success, its meaning depends on whether it’s caused by net inflows or price changes.

  • High AUM from high price changes tells investors that the fund could be largely outperforming other options. This can lead to higher net inflows short term.
  • High AUM from large net inflows seems more appealing for larger investors who seek long-term success. $1B+ AUMS are associated with resilience and experience in managing assets in difficult markets. Thus, a $1B-AUM firm is more likely to attract institutional investment than a $10M-AUM platform.

Linking Fund Performance with Assets Under Management 

The AUM metric can broadly estimate how successful a company is at attracting capital and growing it. It’s important not to interpret AUM changes as the company performing better or worse. 

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If a major crash occurs, both the inflows and ROI will be lower regardless of the company’s background and strategies.

Asset security is a complex matter that AUM can’t entirely guarantee. For example, Alameda Research collapsed and went bankrupt in 2022 despite managing $10B+ funds. Investors should watch other metrics along with the AUM to evaluate the firms’ asset transparency.

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Shawn Munir
Written by

Shawn Munir is the CEO of Coinweb.com and spearheads all the collaborative partnerships for the platform. He bought his first Bitcoin in 2017 and never looked back.

He is also an investor in 200+ Web3 startups and is considered an expert in the field. Before building Coinweb with his co-founders, he co-founded Presail, a management platform designed for companies and investors to manage their investments in Web 3.

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