Bigger than the Roman Empire
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Weekly Digest
It is common belief that bigger is better, but at Momentum we do not always endorse that. One of our functions is to choose which managers to trust our clients’ capital with: manager selection is not a scientific process, there is not a unique set of rules to “evaluate them all” and parameters to analyse are countless. Among these, we consider size (be it of the strategy, the investment team or the firm) to be a meaningful factor. At the peak of its power in 117 AD, the Roman Empire had grown to encompass an area of over 5 million square kilometres, included more than 20% of the world’s entire population with territories comprised of what today are 48 states ranging from England to Egypt and from Portugal to Iraq. However, such a vast, diverse and widespread territory was hard to control, not to mention managing problems such as integration, stability and borders’ defence. Rome had grown too much for its strength to remain unaffected; the Empire lost control and slowly collapsed, surrendering to barbarian invasions, civil wars and plagues. This excessive size doomed one of the strongest empires ever and it is our opinion it can often be a detractor to the performance of investment strategies as well.
