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Behavioral Finance Applied: Strategies, not style boxes

Published on Proactive Advisor Magazine May 6, 2020

Applying behavioral finance concepts to fund manager behaviors has proven helpful in selecting top-performing equity funds.

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In an earlier Proactive Advisor Magazine article, I presented a framework, based on five concepts, for implementing behavioral finance throughout the advising and investment-management process. The fourth of these five foundational ideas states that alternative behavioral tools can be developed for operating in financial markets.

In this article, I discuss how behavioral tools can be used to select and then evaluate an active equity fund, along with constructing an equity fund portfolio. Like every aspect of investing, these decisions are fraught with emotional triggers and, if not properly handled, often lead to poor performance. Applying behavioral concepts can help financial advisors avoid a number of cognitive errors in the construction and management of such portfolios.

Read the full article in Proactive Advisor Magazine
 
 

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The information provided here is for general informational purposes only and should not be considered an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. It should not be assumed that recommendations of AthenaInvest made herein or in the future will be profitable or will equal the past performance records of any AthenaInvest investment strategy or product. There can be no assurance that future recommendations will achieve comparable results. The author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions. AthenaInvest disclaims any responsibility to update such views. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of AthenaInvest.

You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives and financial circumstances. You should consult with a qualified financial adviser, legal or tax professional regarding your specific situation. Investments involve risk and unless otherwise stated, are not guaranteed. Past Performance is no guarantee of future results.

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