Asset Size

"Hey, guy in the convertible red Porsche! Yeah, you. How large is your um... asset?" Oh, sorry. Okay..okay...you knew we'd go there. Duh.

ASSET SIZE refers to the dough under management in an investment or asset management company. Like...how much money is this company managing? And it matters a tonne (trying to go all metric here). Why? Because a decent rule of thumb in calculating fees is to start with 1% as the "average management fee" for larger investment companies, trading public stocks. Earlier breakpoints in fees are higher...many start out at 2% but by the time the fund has $10 billion in assets or something gargantuan, the marginal fee might be 0.6% or less.

So if a $10 billion fund has an average fee of 1%, that fund is making $100 million a year in revenues. For the dozen people making investment decisions and the 40 in the back office, it's a really sweet gig. They can probably all afford those red Porsches. But they don't need to buy them. For reals.