Thanks Chris Donegan, I really appreciate you reading and commenting on my post.
David Coats

David, great thinking. It would be nice if all asset allocation was rational. There are many factors at play here though – which is why established funds grow to dominate until they are patently underperforming or the fee load is too high. Your thinking is a bit like the efficient markets hypothesis, a good theory but less so in practice. Unless the industry is supply constrained the trend is to top quartile on a historic basis and minimum AUM as a gate. After that it’s indexation and then after that a risky bet on a new manager. So we invest for the future in VC based on the past (ironic) and we hedge our bets (and dilute our outcomes). Just saying.

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