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Size Matrix Image Credit: Outlook Money
Size Matrix Image Credit: Outlook Money

Size Matrix

The never-ending debate on the optimum asset size of a fund and how to tackle them in your portfolio.

Narayan Krishnamurthy

We are so used to bigger the better and more the merrier approach to life that when it comes to investing in mutual funds, several investors believe that they should be investing in a fund which manages more money. Until a few years ago, the rush to tom-tom the assets managed by an AMC was the norm, till the regulator put a stop to this practice. Even now, among the distribution community, it is common to hear sales pitch that revolves around the AUM of a fund. The debate has both sides in equal number and there is plenty of data available to prove both the hypothesis, depending on what time frame you use for the analyses.

Size does matter, but it is not the only thing that matters. The performance of a mutual fund is not solely dependent on the assets it manages but how it manages it at different times. There is no clear indication that the performance of a large fund is better than that of a small one. For instance, the last one year performance of the biggest fund by size; HDFC Equity, which manages assets worth ₹16,653 crore is 42.13 percent, which is very good. However, it pales in comparison to JM Core 11, which posted 56 percent returns in the same time with just ₹32 crore assets to manage.

Size is a myth

There is debate among some investors as well as distrib


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