Small and young better for hedge funds

Pertrac has done a study of all the hedge fund in their database from 1996 through 2011 and found some interesting results. Small hedge funds, less than $100 mm, do better than large hedge funds. Young hedge funds which are less than 2 years old do better than older hedge funds. For small funds the cumulative performance difference was 558 versus 356 percent. For young funds versus older funds, the cumulative performance was 827 per cent versus 446 per cent for middle aged 2-4 years and 350 per cent for those tenured or more than four years old. 

Most would argue that the difference is partially associated with survivorship bias and the fact that the young and small are riskier, but this may not fully explain the difference. The young and small are hungrier and that matters.