Assets Under Management (AUM)

Assets under management (AUM), also known as funds under management, refers to the total market value of investments or assets that a hedge fund, mutual fund, or wealth management company oversees on behalf of their clients. AUM is a fundamental concept in the financial industry, including the emerging world of cryptocurrencies and decentralized finance (DeFi).

For individuals new to the blockchain and cryptocurrency industry, understanding AUM is essential in navigating the landscape effectively. AUM serves as a gauge for the size and scale of a fund or investment management company, indicating the trust investors place in the organization’s ability to manage their assets effectively.

AUM fluctuates based on various factors, including the performance of the fund or assets, as well as investor inflows and outflows. When investors add funds to a particular investment vehicle, the AUM increases, and when they withdraw funds, the AUM decreases.

In the realm of cryptocurrencies and DeFi, AUM plays a critical role. For newbies entering the crypto industry, finding a trustworthy wallet and exchange platform that supports their desired cryptocurrencies can be overwhelming. It is recommended to choose wallets and exchanges that offer support for a wide range of coins and tokens, as this indicates the platform’s ability to handle diverse assets and manage large amounts of AUM.

To simplify the process and cater to the needs of investors, many agencies have introduced asset management tools and platforms specifically designed for cryptocurrencies. These crypto asset management platforms assist customers in consolidating their holdings, eliminating the need to manage multiple accounts and wallets. By using such platforms, investors can easily track the performance of their assets and make informed investment decisions.

AUM is a significant indicator that encompasses all aspects of funds and cryptocurrencies. If the AUM is $1 million or less, it is considered relatively small-scale. However, if it exceeds $1 billion, it is considered a substantial project. Regulated funds typically require third-party services such as fund administrators, auditors, and custodians, which necessitate a minimum AUM of $10 million to cover operational expenses.

In most countries, managing a fund requires obtaining a license from the local securities exchange commissions. These regulatory bodies ensure that investment management companies adhere to certain guidelines, protecting investors’ interests and maintaining the integrity of the financial system.

For example, suppose an individual wants to invest in a cryptocurrency index fund, a type of investment fund that tracks the performance of a specific cryptocurrency market index. The AUM of that particular index fund would indicate its size, which, in turn, reflects the level of confidence investors have in the fund’s strategy and management. A larger AUM may suggest that many investors believe in the long-term potential of the cryptocurrency market.

About the Author:

Varit Bulakul holds the position of President of Investment Banking and Digital Assets at The Brooker Group, a publicly listed financial consultancy and capital management company based in Thailand. Varit played a crucial role in the Brooker Group’s transition to digital assets and is leading the company’s vision of integrating the digital asset ecosystem into traditional financial services. The Brooker Group made history as the first publicly listed company to directly invest in DeFi and DApps projects.

Prior to joining The Brooker Group, Varit worked as an auditor at Deloitte in Bangkok. He holds a Bachelor’s degree in Science in Accounting and Finance from Lehigh University and a Master’s degree in Accounting from Boston College.