Assets Under Management (AUM)

Assets Under Management (AUM) is a term commonly used to describe the market value of financial assets or investments that an investment firm manages on behalf of its investors. Frequently used as a measure of success against competitors, the volume of Assets Under Management can be directly influenced by cash inflows / outflows and capital appreciation.There are many types of partnerships, corporations, and securities through which an individual may invest in real estate. For that purpose, these financial vehicles provide an opportunity for capital formation by more than one individual. Most of these investment vehicles are created in a manner that captures the advantages for reduced tax liability with capital gains and other attributes of real estate ownership versus other forms of income. As fund managers buy and sell properties and other changes take place, the combined value of the properties changes from one financial period to the next. AUM reported to individual investors reflects the combined value of the properties for the current financial period of that report. It may be critical for an investor to have that information to properly consider individual tax liabilities. Under tax codes, different forms of indirect ownership of real estate may have various implications for the investors. Some of these investments require an investor to reflect capital gains on the sale of property, for example, while other investments may only require considerations of dividend income and capital gains from the sale of shares. It is most important for an investor to monitor AUM for the purpose of evaluating the performance of the investment.