This paper investigates the role of diseconomies of scale in constraining value creation within the U.S. mutual fund industry. While traditional performance measures such as net alpha typically suggest little or no evidence of managerial skill, the concept of added value—the product of gross alpha and fund size—offers a more robust measure of a manager's ability to extract value from capital markets. Building on the theoretical framework of Berk and Green (2004), we employ a novel bootstrapping methodology inspired by Fama and French (2010) to compare the empirical distribution of added value with a simulated distribution constructed under the null of no scale effects. Using a comprehensive dataset of 2,331 actively managed domestic (U.S.) equity mutual funds from 1993 to 2022, we find that fund size significantly constrains the capacity of skilled managers to generate added value. The effect is particularly pronounced in the upper tail of the distribution, where managers with strong skills are disproportionately affected, whereas unskilled managers exhibit little sensitivity to scale. These results provide strong empirical support for the presence of diseconomies of scale in active management and contribute to the literature by emphasizing value creation over return-based metrics as the appropriate measure of managerial skill.