Can mitigating a manager's behavioural bias improve investment performance?

Clare Flynn Levy, CEO and founder of Essentia Analytics, argues understanding how behavioural bias negatively impacts investment decisions enables fund managers to identify their behaviours and refine their investment processes.

Subconscious bias governs more of our everyday behaviour than we care to admit, and that is just as true of investment managers as it is of retail investors. In order to stay on track as we move toward our long-term goals, we need to understand this bias and the impact it might have on our behaviour. People in our industry - finance and investment professionals - tend to be convinced that their investment decisions are exempt from the madness and self-delusion that afflict the punters. But recent research shows that this assumption is unfounded. Finance professionals make decisions that ...