Loading
Market Intelligence › Basic Terminologies
In which category a big corpus helps and in which it weighs down
Published by The Retail Trader · AUG 09, 2026 · Mutual Funds & AMC
AUM means the total money a fund holds. A large AUM is often taken as a sign of trust, but being large is not the same in every category.
In a large fund, fixed costs are spread over more people, so keeping the TER low is easier. Operationally too it is more stable.
In large cap and index funds, size creates almost no problem, because liquidity there is very high.
In small cap and mid cap the arithmetic is different:
• In small companies a large order moves the price by itself.
• The manager is forced to hold more names, which makes the portfolio start to look like the index.
• Exit is hardest exactly when redemptions are highest.
• This is why many smallcap funds stop taking lump sums on large inflows.
Do not make AUM a standalone criterion, but tie it to the category. For a large cap fund, size is a non-issue; the same size can be the biggest obstacle to a small cap fund's strategy.
This article is for education only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time with the exchange, SEBI and RBI, so verify every number yourself with your broker or an official source.