The main reasons why large funds have not outperformed the i...
The main reasons why large funds have not outperformed the index include:
1. Collective decision-making. When everyone participates in investment decisions, only average results can be achieved, making it impossible to achieve excellence; 2. Herd mentality. Following the crowd, maintaining similar investment portfolios to other large institutions; 3. Institutional constraints. The consequence of fund managers acting independently is that if they make a profit, they don't benefit much, and if they incur losses, they have to take responsibility, so it is better to adhere to the mean; 4. Diversification of investments. Not concentrating investments in quality assets will inevitably lower the yield; 5. Inertia.
1. Collective decision-making. When everyone participates in investment decisions, only average results can be achieved, making it impossible to achieve excellence; 2. Herd mentality. Following the crowd, maintaining similar investment portfolios to other large institutions; 3. Institutional constraints. The consequence of fund managers acting independently is that if they make a profit, they don't benefit much, and if they incur losses, they have to take responsibility, so it is better to adhere to the mean; 4. Diversification of investments. Not concentrating investments in quality assets will inevitably lower the yield; 5. Inertia.
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