Mirror, mirror on the wall - who's the best fund manager of all?

There is a belief that people with psychopathic traits do well in the financial industry – but is this justified?

There is a belief that people with psychopathic traits – like aggression, cold charm and a ruthless lack of empathy – do well in the financial industry.

So a team of academics, led by Leanne ten Brinke, a social psychologist at the University of Denver, set out to investigate if that’s the case.

Her team studied the video interviews of 101 hedge fund managers. The way each fund manager communicates was analysed for behaviour associated with the ‘dark triad’ personality traits: psychopathy, Machiavellianism and narcissism.

The researchers analysed, for example, whether managers tried to completely dominate the conversation, and whether they showed any signs of embarrassment. Did they talk excessively about themselves?

What the researchers found was that when it comes to financial returns, managers with greater psychopathic tendencies and narcissistic traits produce lower returns than their peers by 1 per cent annually.

‘When choosing our leaders in organisations and in politics,’ they argue, ‘we should keep in mind that psychopathic traits — like ruthlessness and callousness — don’t produce the successful outcomes that we might expect them to’.

Interestingly, other studies have found that we are instinctively good at sensing people’s personality traits, even when our assessment is largely subconscious.

So, next time you’re trying to decide whether to invest in a fund, try to watch a video of the manager first, and pay attention to your gut feeling.

Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment