"The odds are that if you are an organically growing company you will have a better chance of maintaining performance over the long term," Edward Bonham Carter, joint chief executive at Britain's Jupiter Asset Management, told an Institute of Economic Affairs conference.
Bonham Carter cited the case of unlisted US asset manager Vanguard as a firm with a robust long-run track record that has grown its business in-house rather than through acquisitions.
Analysts have argued that consolidation is likely in the sector after asset managers were hit by loss of revenues and thin margins suffered during the 2000-2002 bear market, and its aftermath, in equities.
But corporate marriages have not always been happy.
Deutsche Asset Management (DAM), part of Deutsche Bank, which bought US-based Scudder Investments in 2001, has since suffered large outflows and high-ranking staff departures.
Bonham Carter's own firm Jupiter was put on sale by its parent, Commerzbank, about three years ago after the German bank bought it in the mid-1990s. The sale was later abandoned.
A major analysis by US-based consultants Cerulli has concluded that organic growth is the best way to build an asset management company, saying firms taken over by rivals were not generally the best performers in the long term.
As firms grow bigger, it can also be tougher for them to sustain strong investment returns because they can become less nimble players in the market, said Jupiter's Bonham Carter.
"There is an issue of capturing performance as the size of a firm gets bigger and bigger. It is not impossible to do, but it gets harder to do."
Among fund management companies which have been subject to merger chatter are Anglo-US business Amvescap. Its shares jumped last month after dealers reported talk that French bank Societe Generale was to make a bid. Both companies declined to comment.
Analysts said Amvescap might be a target for take-over, possibly from a bank or insurer, after the company agreed a $450 million settlement with US authorities last September for improper trading activities.
The British fund manager HHG Plc has been the object of a bidding war between privately owned Resolution Life Group and venture capitalist Hugh Osmond. Resolution conceded defeat, however, last week. Osmond's offer to buy HHG for 1.07 billion pounds was accepted by 98 percent of HHG shareholders on Monday.
An expanding business can win economies of scale and exploit the strength of large teams of analysts, but size did not guarantee success, Andrew Dyson, head of institutional business, Merrill Lynch Investment Management, told the same conference. "An element of scale remains highly desirable but it is not the be-all and end-all," he said.