Overlooked Measure of Success: Shares Outstanding

"Assets under management" is probably the most important measure of a fund firm's health during these challenging times. And that makes sense because that's how fund firms get paid.

A second, but often overlooked measure, is "Shares Outstanding." Shares outstanding tells how many shares of your fund are in existence through new sales and retention, and doesn't take market moves into account. Therefore, it's an excellent measure of your distribution capabilites. Can you attract and retain customers, even now?

Although our clients' revenues are down, we are proud to say many of them have funds which are at record highs in shares outstanding. Yes, they are seeing inflows and keeping existing shareholders during most months. When the market recovers, they will have plenty of shares to benefit and AUM will recover quickly.

TheStreet.com wrote a story that takes a look at how some analysts of publicly traded mutual fund firm stocks value the industry. Notice one measure the article calls "stickiness" is similar to my point on shares outstanding. Click here for the full article.