AUM: What is Asset Under Management & How is it Calculated?
Fee structures in the financial industry are closely tied to the services provided, whether asset management or administrative functions. Asset management fees are typically calculated as a percentage of AUM, with rates varying based on asset class, investment strategy, and client profile. For example, hedge funds might charge a “2 and 20” model—2% of AUM and 20% of profits—while mutual funds often have lower expense ratios. Regulatory frameworks, such as the Investment Company Act of 1940, mandate transparency in [...]