Our weekly newsletter is out, and this time we’re tackling the question of size. After all, we live in a world where bigger is always better. Our Hummers may not be fuel efficient, but they sure look sharp. McMansions are the only way to keep up with the Joneses, off-brand is off-color, and you best not mess with Texas. But to what end is this obsession with “more” a function of base psychology, and to what extent does it push us to act against our best interests?

Don’t worry- we’re not about to bombard you with a Zizek-esque critique of consumerism, but we have found ourselves asking this question around the office a lot more these days. The past couple of years have been rough for managed futures- there’s no way around it- but many of the smaller managers we work with have done well during this time period, and far better than their titanic counterparts. Of course past performance is not necessarily indicative of future results, but why do the very large programs tend to see performance flatten out over time?

This is not to say that some of the largest CTAs aren’t quality programs. They are the best of the best across almost every quantitative and qualitative measure. But, their past performance really hasn’t been indicative of future results. After all, the giants of the managed futures space were once well known for double and triple digit returns. Today? Not so much.

Some of them will rebound from the current slump. Others may not. But why are they in a slump in the first place? Why aren’t they 100 times better than a smaller manager when they are 100 times their size? Are they delivering smaller results on purpose? Are they getting too big to access the necessary markets and trades? What we found may surprise you.