Chapter 18. Portfolio Size
18.1. Introduction and Learning Objectives
In Chapter 16 we provided evidence that contracts matter for investor effort and governance. But, as we have discussed, contracts are incomplete and therefore other factors matter for governance, such as location (Chapter 17). In this chapter, we focus on the role of portfolio size.
Mutual funds and private equity funds are similar in many ways. They both provide means for fund investors to pool their money, to have their capital managed by professional fund managers, and to have the professional fund managers make multiple investments, also known as the portfolio, which will eventually reap rewards for all those involved. Both investment vehicles are also used by their investors ...
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