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Rekenthaler Report

The Largest Funds are the Safest Bets

The odds favor Goliath.

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Bigger is Better?

Small funds are alluring. They invest where the giants cannot, pursuing less-liquid opportunities and/or trading rapidly. In addition, because they operate quietly, their strategies stand a better chance of remaining undiscovered. For that reason, institutional buyers seek “emerging managers”; Morningstar researchers worry about popular funds outgrowing their usefulness; and fund companies sometimes close their doors to new investors. The best gains come secretly.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.