Would a mutual fund manager to better with $1 billion or $100 million?

[DesertCat]

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although i'm obviously being levelled, it was fund performance and not profits by the mutual fund manager

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Sorry I couldn't resist Buffett's quote is referenced here.

You are right, and I'm shocked any professional would disagree with you. Essentially your coworker is arguing that giving an investor fewer investment opportunities doesn't affect performance. I.e. every fund has a lower threshold where investments are too illiquid to purchase or too small to impact fund performance. The bigger the fund the higher the threshold.

Maybe if you ran a computer driven fund that could afford to hold thousands of different stocks you might not have a lower threshold, but even in that case the bigger the fund the less you can buy of your most attractive investments, as a percentage of the fund.