The assertion that the growth of assets under management makes the sustained alpha more complex does not account for the fact that Berkshire Hathaway has maintained a compound annual growth rate of 19.7% over 60 years, a multiple of 1.88 times higher than the S&P 500.
This historical performance highlights that an entity can significantly outperform benchmarks, even with a massive asset scale.
The overperformance ratio of 9.2 percentage points per year is not just a complexity issue; it is a substantial and sustained alpha metric.
We should rather evaluate risk-adjusted return per unit of assets under management to better quantify the real impact of size.
For example, Berkshire's ability to acquire entire companies, like Precision Castparts for $37 billion in 2016, demonstrates a capital allocation strategy beyond the reach of most traditional fund managers, illustrating a structural flexibility that alters the size-performance dynamic.