The UK version of the fund is now £3bn in size and has lost investors over 1 per cent during the past five years.
Darius McDermott, managing director of Chelsea Financial Services, says one of the questions he always asks the managers with whom he is invested is: how big their fund can grow.
Mr Potter says the problem is not always simply with the size of the fund, but with how much work the fund manager is doing.
He says: “You could have a fund that isn't very big, but the manager could also be running a lot of money for institutional clients on other funds.”
In contrast, he does not think a fund can be too small, and frequently provides the seed capital for new funds.
Tom Sparke, Investment director at GDIM, says practical constraints can also make a fund too large for him to invest in.
He says: “We cannot own more than 20 per cent of any single fund so the smaller the fund, the smaller the stake we can take in a portfolio.”
Asset class is important
He also takes the view that a fund can be too large, saying the importance of this consideration depends on the asset class, with more scope to invest in larger funds in areas such as global equities, while it is more important to him with funds investing in less liquid areas such as bond funds.
Ben Yearsley, investment director at Fairview, says he generally wants a fund to be within the £50m-£100m range as a minimum, as very small funds often have “prohibitive” costs which make it a less attractive investment.
Ben Willis, who runs the model portfolio service at advice firm Chase De Vere, says he generally would not invest client money into a fund that was less than £100m in size for liquidity reasons.
Mr Willis says the problem would be if he owned too much of a fund, and then wanted to withdraw the money, how easily could this be done with a fund with assets of less than £100m.
Mr Yearsley adds that in the past he has sold funds, particularly smaller companies equity mandates, that he feared had got too large.
Ben Seager-Scott, head of multi-asset funds at Tilney, says: “If a fund is too large, then it may not be able to trade effectively in some of the best opportunities that it may have been able to access whilst smaller.
"However, I don’t think this is a question of a ‘pounds and pence’ figure, but rather the size of the fund relative to the market and the impact of liquidity and turnover – clearly a global large-cap manager can manage a larger fund than a UK micro-cap manager.
