Is it necessary that schemes with bigger assets perform better?
It is not necessary that schemes with huge assets, say above Rs.200 crores, may give better returns than smaller schemes, say of assets levels below Rs.75 crores. A scheme, due to a huge corpus, has more options than a smaller scheme to make diversified investments. However, smaller schemes due to their small corpus of funds are more nimble in shifting money from one investment to another and making focussed investments. For funds that actively manage stocks a huge corpus might matter sometimes because of the frequent illiquid state of the Indian stock markets. The bigger in size these funds become the more difficult it becomes to trade stocks. The fund may lose some flexibility when assets reach a certain size because of trading and stock selection difficulties. Size can also be a detriment to funds specializing in small stocks. These stocks have less trading volume, and it can be difficult to trade larger positions without affecting prices.
