Does AUM Size Matter?

Investors generally focus on a fund’s past returns. They think that a larger fund is better. On the flip side, some investors raise concerns about whether a fund can sustain its strong performance after growing to a substantial size. What is the reality? Rakesh Deshmukh takes a closer look at the scenario

Does size matter? Let’s consider a scenario when someone goes to a shop to buy a shirt. Would the customer choose a small size, a perfect size, or an oversized shirt? Well, it depends on the customer’s preference and taste, right? They may opt for any of these options if they feel comfortable with them. The question may arise: Does only the brand name matter, even if the size is not perfect? Would you purchase a shirt even if the size doesn’t make you comfortable, just because it belongs to your favourite brand? You would not! That’s because it would be of no use if you bought it and it doesn’t fit or suit you.