, Columnist
Bigger Is Rarely Better in Money Management
Returns fall when a fund grows, though a few giants have figured out how to avoid this trap.
He might have cracked the code.
Photographer: Jason Alden/BloombergThis article is for subscribers only.
Does market-beating performance disappear as an asset manager gets big? This is a crucial question for investors and for the finance industry.
Most introductory finance classes, or personal finance tutorials, start with an explanation of compound interest. They show how even a modest sum, growing over time at a constant rate, will balloon to incredible size. This definitely works for stocks -- or at least it has so far. If you put your money in the U.S. stock market any time in the past century and then just waited a few decades, you reaped big gains.