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Hedge Funds Lag Because of Their Size: Barclays

Survey debunks prevailing wisdom on what has happened to returns.

By Alastair Marsh, Bloomberg | Updated on August 10, 2016

Barclays Plc just upended one of the most common narratives for why hedge funds are struggling to repeat the glory years: It found it’s not the number of funds that’s causing returns to languish. It’s their size. That calls into question a piece of wisdom so well received that even the industry itself has started to repeat it.

Barclays polled 340 investors with about $8 trillion in assets under management, and 74% of them said the primary reason for meager returns is that the industry itself has become too big. In fact, Barclays found, the malaise is much more likely to be a function of the fact that funds themselves are growing larger, and can’t take the nimble gambles that generated high returns in the past. 

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