Be wary of your fund's size

A bigger asset base doesn't usually favour investors; Jeff Bunce explains why.

Jeffrey Bunce, CFA 15 December, 2017 | 6:00PM

 

 

Jeff Bunce: Traditional active management is a wonderful business model because it scales very well. If a manager has set up shop and has all the pieces needed to run a fund, then there's little cost difference between managing $1 billion and managing $10 billion. But of course, the fees you generate on $10 billion is ten times more than for $1 billion. The rub for investors, though, is that managing ten times more money rarely yields the same results, and is often worse.

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About Author

Jeffrey Bunce, CFA

Jeffrey Bunce, CFA  Jeffrey Bunce, CFA, is a senior investment analyst for Morningstar’s Investment Management group.

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