Regulatory assets under management (RAUM) determines whether you stay under the $150 million private fund adviser exemption threshold. It is calculated differently than NAV, committed capital, or other common fund metrics, and getting the calculation wrong can mean you are inadvertently required to register as an RIA.
The Calculation
RAUM includes the securities portfolios for which you provide continuous and regular supervisory or management services. For private fund advisers, this generally means the fair market value of all securities held across your funds.
Key rules:
Include the fair market value of all securities in your funds' portfolios (public and private holdings, valued at fair value).
Include cash and cash equivalents held in fund accounts.
Exclude unfunded capital commitments. If your fund has $200 million in total commitments but only $80 million has been called and deployed, your RAUM is based on the $80 million in deployed assets (plus any appreciation or cash), not the $200 million.
Exclude real estate and other non-securities assets. If your fund holds direct real estate, that portion is not included in RAUM (though REIT shares are securities and would be included).
Count all funds. RAUM is calculated across all funds you advise, not per fund.
RAUM vs NAV
RAUM and NAV are related but not identical. NAV is typically calculated net of liabilities (including any fund-level borrowing). RAUM is a gross figure that does not subtract liabilities. A fund with $120 million in securities and a $30 million subscription credit facility has an NAV lower than $120 million but a RAUM of $120 million.
RAUM vs Committed Capital
Committed capital is the total amount investors have pledged. RAUM is based on what is actually deployed and held. A $300 million fund that is 40% invested has approximately $120 million in RAUM, not $300 million.
This distinction matters for growth-stage funds. You might raise a $200 million fund and still qualify under the $150 million exemption in the early years, because only deployed capital counts.
When to Calculate
You calculate RAUM at least annually, as part of your Form ADV annual amendment. If you are approaching $150 million, it is prudent to track RAUM quarterly so you are not surprised at year-end.
RAUM can increase rapidly due to portfolio appreciation, new fund launches, or large capital calls. It can decrease due to distributions, write-downs, or fund wind-downs.
Multiple Funds
If you manage multiple funds and SPVs, aggregate the RAUM across all vehicles. Do not assume each fund is evaluated separately.
This article is for informational purposes only and does not constitute legal advice. Consult qualified legal counsel for advice specific to your situation.