Although the field of behavioural science has risen in academic significance and popular prominence in recent years; its employment in the domain of investment remains sporadic and often lacks substance. To an extent this is understandable, the fields of research are somewhat disparate and understanding how to apply important concepts can be fraught with difficulty. Notwithstanding these challenges, developing our comprehension in this area is crucial to delivering improved investment outcomes. Our behaviour frequently diverges from what is perceived to be ‘rational’ or normative, and there is significant evidence of a ‘behaviour gap’ substantially inhibiting investor returns.
The purpose of this blog is to take insights gleaned from behavioural research (encompassing areas such as psychology, sociology, economics and cognitive science) to better understand our behaviour and its drivers. It will aim to apply both historic studies and new insights. Crucially, I will not focus narrowly on behavioural research specific to finance – but rather consider the broad scope of work in the sphere of human behaviour and seek to understand the implications for investors.
Whilst considering investment issues in a broad sense, I will also focus on specific actors in the investment universe – from private investors to professional fund managers. My career background gives me a particular interest in how fund managers operate, and the factors which influence our decision to invest with certain individuals and teams. I will also attempt to discuss topical investment issues through a behavioural lens.
Joe Wiggins – August 2017