Larry Swedroe: Do Mutual Fund Investors Benefit When Their Funds Also Manage Hedge Fund Assets?

FYI: Given the economies of scale — and the opportunities to add more lucrative clients, along with the potential benefits of being able to retain talented money managers — it’s not a surprise that many mutual funds also oversee assets for hedge funds in what’s often referred to as “side-by-side management.” Unfortunately for mutual fund investors, the evidence shows that there are diseconomies of scale in terms of returns. Smaller funds tend to outperform larger ones.
Regards,
Ted
http://mutualfunds.com/actively-managed-funds/mutual-fund-investors-and-managed-hedge-fund-assets/