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How Hedge Funds Remove the Psychology of Investing

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If you don’t want to research investments and managing a portfolio yourself, go for an index fund. Index funds will save you time and effort. In order to find out more information about index funds, we went to the investment management company, Willow Creek Capital Management . According to a portfolio manager from Willow Creek, investing in index funds has another key advantage. Investing in hedge funds can help you get better returns by removing the psychological biases that individual investors must overcome to manage a portfolio effectively. By comparison to the average equity investor, who achieved an average annual return of just 3.66%, from 1985 to 2018, the S&P 500 returned 10.35% per year on average. That explains the huge gap between individual investors and the S&P 500 index. Experts from Willow Creek Capital Management,  in affiliation with the University of Berkely , point out that individual investors suffer from psychological biases such as: ·