Do not have the energy to get into a philosophical argument on this but here&#x27;s an answer to your question:<p>If a hedge fund grows from 5 to 10bn, it is unlikely to be able to continue its current strategy without returns suffering.  You can only throw so much money at something before it stops working.  As a result, you need to hire more people to manage the additional assets, you need to hire more operational staff to make sure everything runs smoothly, you need to hire additional investor relations staff to attend to your new investors, blah blah.<p>Management fees are barely enough to keep the lights on for an average sized fund and if you&#x27;re a new fund, chances are you are waiving some, if not all fees.  If I manage $500mm, that&#x27;s $1mm in management fees (assuming 2% which is a very liberal assumption).  If I raised $500mm, investors are going to want to see a COO, CFO, CCO, blah blah blah.  Let&#x27;s say I hire all of those, I&#x27;m the sole portfolio manager and I have a single analyst.  Between salaries for all those and random incidentals, there&#x27;s not much leftover from that $1mm in management fees.