A recent article in CNBC reports that funds managed by three-person teams outperform “solo-run” fund by 58 basis points a year.

According to a study conducted by Michael Mauboussin, director of research at BlueMountain Capital Management, “Teams do better than single-managed funds. The best team size is three. The next best is five.” Morningstar data shows that 75% of all actively managed funds are team managed, in contrast to 1992 when 67% of U.S. stock funds were run by a single manager.

Mauboussin says that finding the right team size is paramount, that teams become less productive if they’re too large due to “reduced motivation and elevated costs of coordination.”

“Smaller is better than bigger,” says Mauboussin, adding that managers should also focus on social category diversity when creating a team—to integrate differences in race, ethnicity, gender, age, etc. According to Mauboussin, cognitive diversity includes differences in education, training, experience, expertise and personality, which is key to problem-solving.”