Fund Size

“A fat wallet is the enemy of superior investment results”  Warren Buffett

Huge assets drag down returns” Allan Mecham

"We have not believed we could get the same satisfactory results on very large capital as we can on a more moderate amount of capital.  Because if you deal with special situations and undervalued securities, the markets in those for the most part are not very large.  It is not possible to acquire an unlimited amount without affecting market price, and if we had 10 times as much capital it would be very difficult for us to invest it the same way as our present capital" Benjamin Graham 1955

Size, at a certain point, gets to be an anchor, which drags you down.  We always knew that it would.  You get $10 billion in marketable securities.  Show me unbelievable compound rates when people get $10 billion”  Charlie Munger

"Good results will bring a manager more money to manage.  If inflows are allowed to go unchecked, eventually more money will bring bad performance.  Increased assets under management can shorten the list of potential investments large enough to make an impact, erode a manager's ability to be selective and agile; and encourage "style drift", under which a manager strays into strategies beyond his core competence in an effort to put money to work"  Howard Marks

“The increased size of assets under management definitely reduces our flexibility and therefore our future returns.  No good deed goes unpunished” Ed Wachenheim

“One of the historic truisms of the hedge fund world is its overriding diseconomy of scale in the management of money.  The ability to achieve superior performance often begins to decline as one manages more money beyond the intellectual breadth of a manager”  Michael Steinhardt

“Being too large in an activity enables the rest of the market to pick you off or ‘gun’ for you” Paul Singer

"Once you get to a certain size, if you mess up they are going to roast you alive" Reade Griffin

"Every stock market system with an edge is necessarily limited in the amount of money it can use and still produce extra returns" Ed Thorp

“What may be the optimum size under some market conditions and business circumstances can be substantially more or less optimum under other circumstances” Warren Buffett, Partnership Letter

“In general, the more capital you manage, the worse the returns” Mohnish Pabrai

“I know more about business and investing today, but my returns have continued to decline since the 50’s.  Money gets to be an anchor on performance”  Warren Buffett

“I must assess, when evaluating a strategy as well as the absolute size of our funds, whether we can move properly in and out of positions.. If you are large, it is important to know how big the exit doors are.  Large size makes it harder to move in and out of positions, and can increase the realistically calculated costs of trading (including market impact).  It is interesting in this regard that some of the world’s greatest traders (like Bruce Kovner, Paul Tudor Jones and Louis Bacon) decided to return significant portions of their investors ‘ capital after 1994, in order to radically downsize”  Paul Singer

"You want to be big enough that you can see everything and small enough that you don't kill yourself with size." David Tepper

"Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a hugestructural advantage not to have a lot of money."  Warren Buffett