Question 1

What is AUM and why does it matter to investors?

Accepted Answer

Assets Under Management (AUM) is the total market value of assets a fund manager or investment advisor manages on behalf of clients. It matters to investors as a signal of institutional scale, operational stability, and investor confidence — larger AUM typically means more resources for due diligence, operations, and deal sourcing. For new investors evaluating a manager, AUM growth over time is evidence that others have trusted the firm with capital.

Question 2

How do I show AUM vs capital deployed on the same chart?

Accepted Answer

Use a line chart with two lines: total AUM (committed and invested) and capital deployed (actually invested in deals). The gap between the two represents uninvested capital (dry powder). Showing this gap is important for LPs — it demonstrates your deployment pace and how much capital is still earning its way into returns. A widening gap may signal deployment challenges; a closing gap signals active deal execution.

Question 3

What drives AUM growth for a fund manager?

Accepted Answer

AUM grows through new capital raises (attracting new LPs or getting existing LPs to re-up), portfolio appreciation (the underlying assets growing in value), and launching new fund vehicles. AUM can shrink through capital distributions (returning realized gains to LPs), redemptions (in open-end structures), or portfolio depreciation. For a fundraising pitch, showing consistent AUM growth demonstrates institutional momentum.

Question 4

How should I present AUM in a fundraising pitch?

Accepted Answer

Show the AUM trajectory across your fund history — Fund I, Fund II, Fund III — to demonstrate that each successive fund raised more capital. This signals LP confidence in your track record. Alongside the AUM chart, provide context: number of LPs, percentage of LP re-up rate (what fraction of prior LPs reinvested), and any marquee institutional investors. Re-up rate is particularly compelling — it shows existing LPs voted with their capital.

Question 5

At what AUM level does a fund become institutionally credible?

Accepted Answer

Institutional investors (endowments, pension funds, fund-of-funds) generally have minimum check sizes and minimum manager AUM thresholds. Many institutional allocators won't consider managers below $100-250M AUM due to operational and counterparty risk concerns. For family offices and high-net-worth investors, emerging managers with $25-100M AUM are viable. Crossing the $100M AUM threshold is often cited as a meaningful credibility milestone for boutique managers.

AUM Growth Chart

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FAQ: AUM Growth Chart