It may be seen a very trivial question but I would appreciate any clarification regarding this topic. Does 9.5 trillion dollars AUM mean company "possesses" this money? The number is bigger than nearly all GDPs (excepts the USA and China).
Thanks
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No it is Assets Under Management. It is other people's money that they manage. Have a look at their financial statements.
Edit: I suppose it is semantics what you mean with 'possess'
I checked, yes now it is pretty much clear. Thank you for the clarification!
They still get to own the voting power of those assets though
Well, thats still very impressive. Is there any reason why its AUM is way larger compared to other investment management companies?
A brilliant buy of iShares, and a strong commitment to high-volume low-margin businesses.
Think of it this way: If I offer to run a simplistic indexing strategy for your $1B at a 1 bp fee, I'm only making $100k/yr and probably not covering costs. I can still report $1B in AUM though.
I know enough about the fixed costs in the space to say that some of their funds probably aren't profitable for the firm until the AUM is somewhere in the high 10 figures. I can't deal with those margins. Just doing the basic AUM X NER to get a rough idea of gross revenue would surprise you. So many of the biggest funds end up so low on the revenue listing.
AM is fun because you get to throw those insane AUM numbers around. The catch is that it's all OPM and you never get to see any of it.
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