Mutual funds benefit from cost savings as they grow in size, but larger funds tend to perform worse. Fund expenses decrease as the fund size increases, mainly due to lower management fees. Institutional funds generally have more cost savings than retail funds. The ability of fund managers to beat passive benchmarks decreases as the industry grows. Actively managed funds show diminishing returns as they get bigger. Smaller funds are more likely to have better investment strategies. Overall, fund size affects performance and expenses in various ways in the mutual fund industry.