I understand ADV is leveraged amt RAUM and I was 1. Wondering how I can find net AUM and 2. Curious if adv shows total AUM and if the actual amt may be higher or lower. If a fund has sub-funds that invest intl. then a lot of the times holdings don’t show up on the 13F so I was wondering if something like this might lead to overstating/understating AUM for a fund if a large portion is managed offshore. Would appreciate any thoughts tyty!
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Navigating the waters of a fund's Assets Under Management (AUM) can indeed be complex, especially when considering regulatory filings like the ADV and public disclosures such as the 13F. Here's a breakdown to address your queries:
Finding Net AUM: The net AUM typically refers to the assets managed by a fund after deducting any leverage. This figure can be more challenging to find as it's not always publicly disclosed in a straightforward manner. For hedge funds and private equity funds, the net AUM might not be directly available unless the fund discloses it in investor reports or marketing materials. For mutual funds and ETFs, the net asset value (NAV) provided in their daily updates can give a good indication of the net AUM.
ADV and Total AUM: The Form ADV Part 1 requires registered investment advisers to disclose their Regulatory Assets Under Management (RAUM), which includes both the securities portfolio and any cash or cash equivalents. This figure can give a broad sense of the total AUM but might not capture the complete picture, especially for funds with complex structures or those that use leverage. The RAUM is intended to provide a regulatory snapshot rather than a detailed financial analysis.
Impact of Sub-Funds and International Holdings: You're correct in noting that holdings in sub-funds or international investments might not fully appear on the 13F filings, which are required only for U.S.-listed equities and certain equity options and warrants. This discrepancy can indeed lead to a misrepresentation of a fund's actual AUM, either overstating or understating it, depending on the nature of the investments. Funds with significant international operations or those that use sub-funds for specific strategies might have a more complex AUM picture than what's readily apparent from U.S. regulatory filings.
In essence, while regulatory filings like the ADV and 13F provide valuable insights into a fund's operations and investment focus, they might not always offer a complete picture of the fund's total or net AUM. For a more accurate understanding, one might need to look at additional disclosures, investor reports, or even direct inquiries to the fund, keeping in mind the limitations and potential for discrepancies based on international operations and the use of leverage or sub-funds.
Sources: Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role, Idea Generation... and Why Wall Street Sucks at It, UMM PE List, Savings from Working at a Hedge Fund, Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role
"if a fund has a sub fund that invests internationally". Doesn't matter at all. Many firms will have a master/feeder with sub funds underneath. In order for money to flow through to the sub fund, you first have to capitalize master/feeder vehicle. You shouldn't double count these assets at each level. Sans PE-style vehicles, assets should roll up at strategy level.
What is the purpose of the question? Are you trying to back into the firm's profitability to more effectively negotiate an offer? If the fee structure is on total assets then who cares, just use RAUM. If not, then just ask em what their equity base is.
ADVs at minimum need to be updated annually so tend to always be stale but fine to use for napkin math. Other sources are third party data providers (Preqin) but unless managers or LPs report to them, they drink from the same well as you.
Thanks for the answer that’s really informative. The purpose is to 1. Figure out profitability and see if RAUM trend is reliable from ADV and 2. Understand what their substantial intl activity would mean for how their AUM looks vs how their 13F assets look. Lot of small details in their ADV I don’t quite know how to interpret to determine how stable/large/profitable the firm is. Honestly man, i really dk that much about the industry and I’m trying to diligence how good this fund actually is. Can I PM u some questions?
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