Asset management and funds
Net flows (net new money)
New client money coming in minus money taken out.
Last reviewedWhat does Net flows (net new money) mean?
Net flows (called net new money in wealth management) are the money clients put in minus the money they withdraw in a period. They show whether clients are choosing the firm, unlike market gains, which the firm does not control. An AUM bridge splits the change in AUM into both parts: opening AUM plus net flows plus market movement equals closing AUM. Example: opening AUM of 100, inflows of 12, outflows of 9 and a market gain of 6 give net flows of 3 and closing AUM of 109. Net flows as a share of opening AUM, here 3 percent, are often called organic growth.
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Related terms
- Assets under management (AUM)The total market value of the money a firm manages for clients.
- Active versus passive investingTrying to beat the market versus simply tracking it at low cost.
- Sovereign wealth fund (SWF)A state-owned investment fund, often built from oil revenues or reserves.
- General partner (GP)The firm that raises and runs a private equity or venture fund.
- Limited partner (LP)An investor that puts money into a private equity or venture fund.
- Carried interest (carry)The general partner's share of a fund's profits, usually 20 percent.
- Hurdle rateThe minimum return a project or fund must beat before it counts as worth doing.
- Dry powderMoney investors have committed to funds but that has not yet been invested.