Marshall: Beyond a critical mass threshold, fund size is a disadvantage
Sir Paul Marshall · Paul Marshall – 10 ½ Lessons from 23 years at Marshall Wace (Capital Allocators, EP.157) · Sep 21, 2020 · at 40:33
Sir Paul Marshall, co-founder of Marshall Wace, discusses the relationship between asset size and performance in hedge fund management.
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“Although you need a certain amount of size to have critical mass and pay the bills, beyond a certain level, size is most of the time a disadvantage. And so it's a sadness to me in a way that there are so many barriers to entry now and that it is getting more concentrated. But the point that follows from that is we've built our business all the way through by recognizing that size matters at a, beyond a certain point. Your returns are handicapped by the friction costs of trading or by your footprint in the market, your liquidity footprint.”
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