\n(Seeking Alpha)Research shows that smaller hedge funds beat the performance of their bigger rivals.
\nDue to the carrying capacity and higher transaction costs of having a large AUM, large funds struggle to keep up with the returns of smaller, nimbler funds.<\/p>\n
Moreover, talented individuals tend to want to start their own firms rather than work for larger rivals, as this is how they maximize their personal wealth.<\/p>\n
It’s also worth thinking about the utility of money. If you can retire with $100-$150 million, quit and live a no-stress with Vanguard funds and charity balls afterward, why wouldn’t you? Only the empire builders remain after money ceases to matter.
\nMost media attention falls on the largest hedge funds (and famous investors). Names like Dalio, Buffett, Asness, Einhorn, and Icahn pepper the news on a daily basis. As good as they are, they structurally may not be able to achieve as high of returns as their smaller counterparts. <\/p>\n