<h1 class="ql-align-center"><strong style="color: rgb(230, 0, 0);">Assets under management</strong></h1><p class="ql-align-center"><br></p><h3><strong>Context&nbsp;</strong></h3><ul><li class="ql-indent-1"><strong>Life Insurance Corporation of India (LIC)</strong> said its exposure to the Adani Group was less than 1% of the total <strong>assets under management (AUM) </strong>at book value.</li></ul><h3><br></h3><h3><strong>About&nbsp;</strong></h3><ul><li class="ql-indent-1">It measures the total market value of all the financial assets which a financial institution (such as a bank, mutual fund, or hedge fund) manages on behalf of its clients and themselves.</li><li class="ql-indent-1">AUM is an indicator of the size and success of a given fund house.</li><li class="ql-indent-1">AUM can be calculated in different ways, depending on the firm’s discretion.</li><li class="ql-indent-1">AUM fluctuates daily, reflecting the flow of money in and out of a particular fund and the price performance of the assets.</li><li class="ql-indent-1">Funds with larger AUM tend to be more easily traded.</li><li class="ql-indent-1">A fund's management fees and expenses are often calculated as a percentage of AUM.</li></ul><h3><br></h3><h3><strong>Importance of AUM:</strong></h3><ul><li class="ql-indent-1">AUM helps to build the market value of the firm.</li><li class="ql-indent-1">It can be used as a market tool to attract potential new customers. The higher a firm's AUM is, the more likely people are to trust them and invest with them.</li><li class="ql-indent-1">A fund's management fees and expenses are often calculated as a percentage of AUM.</li></ul><h3><br></h3><h3><strong>Book value and Market value of a company:-</strong></h3><ul><li class="ql-indent-1">Book value is the net value of a firm's assets found on its balance sheet, and it is roughly equal to the total amount all shareholders would get if they liquidated the company.</li><li class="ql-indent-1"><strong>Market value</strong> is the company's worth based on the total value of its outstanding shares in the market, which is its market capitalization.</li><li class="ql-indent-1">Market value tends to be greater than a company's book value since market value captures profitability, intangibles, and future growth prospects.</li></ul><h3><br></h3><h3><strong>Note:-&nbsp;</strong></h3><ul><li class="ql-indent-1">When the market value is less than book value, the market doesn't believe the company is worth the value on its books.</li><li class="ql-indent-1">A higher market value than book value means the market is assigning a high value to the company due to expected earnings increases.</li></ul><p class="ql-align-center"><br></p><h1 class="ql-align-center"><strong>PRELIMS NOTES:</strong><a href="https://sunyaias.in/notes/prelims-2023" rel="noopener noreferrer" target="_blank" style="color: rgb(0, 102, 204);"><strong>CLICK HERE</strong></a></h1>