What It Means
AUM (Assets Under Management) is the total market value of all the money investors have collectively put into a mutual fund scheme, or across an entire fund house (AMC). It tells you how large a fund is, nothing more and nothing less.
How It Works
A high AUM reflects popularity and trust, and it also lowers the fund's expense ratio, since SEBI's expense ratio caps step down as AUM grows. But size can work against a fund too: a very large small-cap or mid-cap fund can struggle to deploy fresh money without moving prices in the less liquid stocks it needs to buy, an effect that doesn't trouble a large-cap or index fund nearly as much. A fund's AUM says nothing about how well it has actually performed.