Rising hedge fund managers can quickly become victims of their own success. Outperformance brings inflows to the fund, bloating it until the high returns that first brought new investors starts to suffer, driving them away again. For a hedge fund investor who wants to stick with a proven manager but is concerned with rising AUM, this poses a dilemma with no easy solution. “The key is looking beyond returns. By the time returns deteriorate, it’s too late to act,” writes Novus Head of Europe Andrea Gentilini. “By then, the negative impact of AUM on performance has already materialized, and allocators…