Assets Under Management vs Private Equity

A question that sometimes comes up is: Assets Under Management vs Private Equity. Its not a straightforward question or comparison because its like comparing apples to… boats. My suspicion is that those asking about private equity vs assets under management are either new to the space or perhaps confusing terms. Below are brief definitions of assets under management and private equity, as well as some alternative (and likelier) questions.

What is Assets Under Management?

Assets under management is usually abbreviated as AUM and refers to the value of assets that an “asset manager” manages. For instance, I can google “Vanguard AUM” and see that Vanguard manages roughly $7T of assets. This includes the total value of their mutual funds, exchange-traded funds (ETFs), separately managed accounts (SMAs), and so on, all of which are owned by “asset owners” such as individuals, pensions, and so on.

What is Private Equity?

Private equity is a type of asset management. Private equity refers to investing in assets that are not publicly traded. If a business has stock listed and traded on an exchange then it is public equity; if the business’ shares are not traded publicly then it is private equity. Private equity can include anything from a small mom-and-pop business to a large international corporation.

Assets Under Management vs Private Equity

Based on the above definitions, it is apparent that assets under management and private equity are not really comparable terms. Below are some ideas about what some might mean when they ask about assets under management vs private equity:

Asset Management vs Private Equity

Asset management is an expansive term that refers to managing investments on behalf of asset owners. Private equity is a type of asset management and so it is a subset of asset management. Perhaps questioners are confused between asset management and assets under management.

Assets Under Management of Private Equity

Another possibility is that questioners are wondering about the AUM of private equity. The answer depends on whether the question refers to all private equity, private equity funds, a certain sponsor’s private equity funds, etc.

Posted by Matt

Matt is an investor and investment adviser. He is a CFA charterholder and a CAIA charterholder. His writing on this site is purely educational; he will not make recommendations on this site since he does not know individual readers' situations.