Does Size matter Performance and How?: Case of Thai Property Fund

Abstract

Effect of size is widely studied as one of the key determinants to performance of the investment asset. This research applies both quantitative and qualitative methods to explain size effect to performance of the property fund over 2003 – 2013. Although the quantitative result explains insignificant relationship between size and performance, small coefficient value with positive sign (B, 0.02) suggests some degrees of benefits for the property fund to be large. This result contradicts to other findings of Australia and the U.S. REITs with negatively insignificant and significant coefficients of size to their performances respectively due to the optimal point existence for economies of scale benefit and variable management expenses on asset size. The qualitative result supports optimistic rational of large size that the property fund might have less liquidity risk and attract the institutional and foreign investor, and consequently increase premium to market price, although economies of scale is suggested to generate insignificant benefit. This research might support some size benefits to the property fund, and suggest one of the reasons for them to convert to be REIT to increase capital for being larger.