Earnings increasing & multiples expanding (Re-rate commencing), page-328

In many cases instos are limited by the investment mandate set before them and the sheer scale of their weightings. They cannot trade as opportunistically as we can, and need serious liquidity events to exit a position when there is low volume.

There's always been a perception that instos know best, but especially in the small cap world this is far from the truth. They are usually more lazy and low touch, trying to outperform the market with weighting rebalances on a periodic basis, whilst also taking a fee.

A majority of fund managers actually empirically underperform the index and, IMO, far underperform vs top pedigree private opportunistic investors. This is why Warren Buffet dislikes investment funds that charge a fee on FUM.
It's simply a day job for them and they get paid a handsome salary to outperform a defined index benchmark by a few percent. If you are investing in the small cap space, an annualised return of a standard index is a very poor result given the additional risk taken on. In saying that, we all start somewhere.