Several years ago, AllAboutAlpha.com — an online strategic information service for the asset management and hedge fund industries — set out to answer a key question; do smaller hedge funds outperform larger peers?
The study was confined to long/short equity hedge funds only and looked at the returns of nearly 3,000 funds over a ten year period. Funds were divided into two size groups, those that managed $50 million to $500 million (small) and those that managed more (large).
AllAboutAlpha’s study found that the group of small hedge funds outperformed their larger peers by an average of by 254 bps per annum over five years and 220 bps per annum over ten years.
What’s more, virtually all of the outperformance was due to...
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