Love is not logical. Arguably, nor are investors who stick with underperforming investments in the belief that their fortunes may reverse against all evidence, writes John Roe, head of multi-asset funds at Legal & General Investment Management.
But many fund managers appear to hold certain assets even when it would be prudent to walk away, going against their more rational judgement and demonstrating a very human susceptibility to behavioural biases. The impact of behavioural biases can be so strong on investors and their investment decisions that Israel prohibited the display of retirement funds' investment returns for periods shorter than one year; in doing so, they limited the impact of short-term, recent performance on investment decisions. Valentine's Day Special: Selectors reveal their longest fund courtships This a...
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