In a small, concentrated market like Australian equities, fund capacity is an important consideration for investors. Portfolios should be closed at the level of FUM at which the manager’s ability to deliver results, according to the fund’s stated strategy and objectives is not compromised. The exact level of full capacity is difficult to determine. Size should be a concern, however “large” is not necessarily “bad”. Many external and internal factors affect how large a manager can grow before its ability to generate alpha is jeopardised. However, research is limited and often based on simulated, generalised data. This paper discusses why the most important factor is the...