Maybe size does hurt, after all


By Michelle Celarier

In recent years, the conventional wisdom about hedge funds has been turned on its head. After repeating the mantra that size hurts performance for more than a decade, investors suddenly embraced the biggest funds with gusto. Who could quibble with the success of firms like D.E. Shaw, Goldman Sachs and Renaissance Technologies, which famously boasted that it could easily go to $100 billion in its new institutional equities fund?

The quantitative strategies that allowed these funds to mop up the institutional assets that flowed to them in massive quantities were a big reason for the huge growth