Size doesn't matter, mostly

Inherently, the size of a mutual fund should not matter, and for the most part, it does not. However, this does run against a deep-set bias that investors have. When it comes to financial service providers (and many other businesses), customers like size. People seem to believe that a big shop, a big retail chain or a big newspaper will provide better goods or services. The underlying logic is that a business becomes big only if its customers are happy. This may or may not be true in all cases. However, it's certainly far from the truth in the case of mutual funds. Investors often tend to believe that the size of a mutual fund is important. In this context, size means the amount of money that a fund manages. This belief has no real basis. There's no inherent strong reason that a larger fund is better than a smaller one. If a smaller fund has a better track record than a larger fund of the same type, then by all means investors should choose the smaller one. Of course, investors