Assets Under Management

AUM is a measure of size, not of quality, and it grows through both good returns and new inflows — so a rising figure says nothing about performance. Size cuts both ways: it lowers the expense ratio through SEBI's sliding scale, and it reduces flexibility, because a very large fund cannot build meaningful positions in smaller companies. That constraint is real in small and mid-cap funds, several of which have restricted inflows on reaching it. AUM also drives the AMC's revenue, which is the incentive behind marketing whichever scheme is currently performing well.