Have you ever gone through the factsheet of any mutual fund? Then you must have noticed that the first line mentioned in it is the AUM of that fund. AUM stands for Asset Under Management. It is one of the widely discussed metrics in the world of mutual funds but is not completely understood by many investors. In layman’s terms, AUM refers to the total market value of assets managed by a mutual fund scheme or Asset Management Company (AMC) on behalf of investors. This is not just a number but a lot more than that – it signifies investor confidence, fund size, and market performance. In this article, we are going to tell you all about AUM, how it is calculated, factors impacting it, and the significance of AUM for you, an Indian mutual fund investor, in 2026.
What is AUM (Assets Under Management)?
The term 'Assets Under Management' (AUM) is the aggregate market value of all the assets, such as equities, securities, and cash, held in the mutual fund scheme during any particular point in time.
In this case, if the mutual fund scheme allocates ₹500 crore in shares, ₹200 crore in bonds, and ₹50 crore in cash, the AUM of the scheme shall be ₹750 crore. Till 31st July 2026, the AUM of the entire Indian mutual fund industry was ₹85.76 lakh crore (Rs 85.76 trillion).
How is AUM Calculated?
AUM is calculated by adding up the current market value of every asset held by a fund, then subtracting any liabilities. The basic formula is:
AUM = Number of Units Outstanding × NAV per Unit
Since AUM depends on market prices, it moves up or down even without new investor money coming in. This is why AMFI also publishes AAUM (Average AUM) the average value over a month for a more stable comparison. For instance, India's Average Assets Under Management (AAUM) for July 2026 stood at ₹86,33,798 crore.
What Factors Affect a Mutual Fund's AUM?
AUM may either increase or decrease depending on various factors, such as:
- Stock market changes: When the value of stocks and bonds increases, AUM increases, while a decline decreases AUM even without any redemptions.
- New investments and SIPs: The new investments made, including systematic investment plans, will directly contribute to the AUM.
- Redemptions: Redemptions cause a reduction in AUM.
- Performance of funds: Good performance will bring in new investors, thereby increasing the AUM.
- Investors' sentiments: Economic and geopolitical events often affect the investors' sentiments.
Why is AUM Important in Mutual Funds?
Here’s why AUM is so crucial for mutual funds.
- Indicates trust: A large and growing AUM often signals sustained investor confidence in a fund or AMC.
- Reflects stability: Bigger funds may have more resources for research and risk management.
- Affects expense ratio: Expense ratio is governed through TER slabs prescribed by SEBI — larger funds usually charge lower percentage fees.
- Shows industry health: Rising industry-wide AUM reflects growing financial participation. The industry's AUM has grown from ₹15.18 lakh crore historically to over ₹85 lakh crore today.
Is a Higher AUM Better for Investors?
Not always. A higher AUM shows popularity and stability, but it is not the only factor to judge a fund by. When it comes to equity investments, particularly small caps and medium caps, an excessively high AUM might make it difficult for the fund managers to purchase or sell equities. This would not be an issue in debt funds and large caps. The AUM of a fund should not be the only criterion used when deciding to invest; instead, it should be balanced with the performance history of the fund and its managers.
How Does AUM Differ Across Mutual Fund Categories?
AUM composition varies widely by scheme type and investor base in India:
- Equity schemes: As of April 2026, equity-oriented schemes made up 43.7% of total mutual fund assets, the largest single segment.
- Hybrid and other schemes: Hybrid schemes represented 13.5%, while other schemes such as index funds and ETFs comprised 18.5%.
- Individual vs institutional holders: Individual investors accounted for 61.2% of total mutual fund AUM in January 2026, while institutional investors held the remaining 38.8%.
- City-wise split: Equity-oriented schemes made up 65.3% of AUM in B30 (beyond top 30) locations, compared with 38.7% in T30 cities, showing strong retail equity participation beyond metros.
How Often is Mutual Fund AUM Reported?
AUM figures are disclosed by AMFI on a monthly basis for the entire industry as well as for schemes and AMCs separately. Mutual Funds themselves disclose the AUM figures scheme wise on a monthly basis through factsheets and half yearly through portfolio disclosures as per SEBI guidelines.
Conclusion
AUM is a simple yet powerful indicator of a mutual fund's size and investor trust. While it does not guarantee better returns, it offers useful context on stability, cost structure, and market standing. As of July 2026, India's mutual fund industry manages ₹85.76 lakh crore across 28.09 crore folios, reflecting the country's deepening investment culture. Rather than chasing funds with the highest AUM, investors should evaluate it together with performance, risk profile, and personal financial goals.
FAQs on AUM in Mutual Fund
How is AUM calculated in a mutual fund?
All assets are valued at market rates and then netted out after deducting liabilities and expenses.
Does AUM affect NAV?
AUM does not directly determine the NAV; however, NAV is computed as a quotient of net assets (one of the components of AUM) divided by the total number of units.
What is included in assets under management?
Assets under management consist of shares, bonds, government securities, cash, and other financial instruments held by the mutual fund, less liabilities.
How frequently is mutual fund AUM declared in India?
AMFI provides the AUM of the mutual fund industry and also AMC wise on a monthly basis, and funds report on scheme level through monthly factsheets.
Is high AUM always good for a mutual fund?
Not necessarily. Although it indicates popularity, too high AUM for small-cap or mid-cap funds may reduce the flexibility of fund managers at times.
How is AUM calculated?
AUM is computed as the sum of market value of all assets managed by the fund less any liabilities, calculated on a daily basis by AMC.
What is the difference between AUM and NAV?
AUM refers to total value of assets managed by the fund, whereas NAV refers to the value of fund per unit which is computed as net assets divided by total units.
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