Small, nimble hedge funds are able to deliver higher returns, according to industry wisdom, because they are able to trade less liquid stocks than some of their more established peers. But smaller funds’ difficulty absorbing huge sums of capital has kept them out of reach of many large institutional investors.

That is slowly changing, say a number of bankers and investors. The Church of England’s £8bn endowment fund, one of the UK’s largest single investors in hedge funds, last year pulled its assets from large equity hedge funds and reallocated them to smaller ones.