The Hidden Defect in Active Managers

Photo by Marija Zaric on Unsplash

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It’s hard to think of being a narcissist in positive terms.

The Mayo Clinic defines being a narcissist as a “personality disorder... in which people have an inflated sense of their own importance, a deep need for excessive attention and admiration, troubled relationships, and a lack of empathy for others.”

This doesn’t seem like a person you want to be around.

There’s evidence that you also don’t want someone with these personality traits managing an active mutual fund.

The ramifications of this research raise interesting issues: Before you recommend an actively managed fund, should you investigate the personality characteristics of the fund manager? If so, how would you do that?

What other takeaways do the findings in this study have for you as an investment advisor or someone who runs an advisory firm?