Where smaller funds held an edge
Not all strategies favor scale. In relative value and arbitrage, a category that demands speed, precision, and nimble execution, smaller funds outperformed their VIP counterparts by a significant margin in the first half of 2026. VIP funds in this category returned just 2.9%, while the broader relative value index returned 5.4%.
The report’s explanation is straightforward: relative value and arbitrage strategies rely on agility, and executing at scale introduces approval chains and structural constraints that erode the timing advantages these strategies depend on.
Smaller funds, while accepting higher volatility, captured more of the upside. That trade-off is a critical consideration for allocators weighing the merits of large platforms against specialist boutiques.
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“A month like March shows why granular data matters,” said Mike Muniz, chief strategy officer at Canoe Intelligence. “Even the largest hedge funds drew down almost in line with the broader index, yet multi-manager platforms held losses to about 1.3% and nearly all recovered by April. Without complete, net-of-fees return histories for the biggest managers, that difference stays invisible.”