Assets under management (AUM) is a concept used to measure the size of an investment fund or manager. It is the total market value of the investments that a person or entity manages on behalf of investors. AUM includes not only the underlying investments that a fund holds, but also any cash or other liquid assets held by the fund.

AUM is important because it reflects the size of the fund and its ability to effectively manage investments. Funds with higher AUM typically have greater liquidity, meaning they can be more easily traded. A fund with higher AUM is also more attractive to investors as it has greater potential for growth. The AUM also indicates whether the fund is open to new investors, as well as the degree of exposure to certain types of investments. Furthermore, a larger AUM may give the fund the ability to offer attractive pricing and better deals to its investors.

A fund's management fees and expenses are often calculated as a percentage of AUM. This means that larger funds with higher AUM may be able to offer lower internal expenses due to their scale. The AUM is also used to calculate other performance metrics, such as total return and Sharpe ratio.

Because AUM fluctuates daily, it is important for investors to monitor changes in the fund's AUM over time to ensure that the fund is still performing as expected. A sudden drop in AUM can indicate that investors are losing confidence in the fund or that the fund is experiencing poor performance.

In conclusion, AUM is an important metric used by investors and advisors to determine the size and performance of a fund. It is used to calculate management fees and expense ratios, and it can also be used to measure liquidity and exposure to certain investments. Investors should monitor changes in AUM over time to ensure the fund is still performing as expected.