Why behavioural finance is essential for portfolio management

An investment strategy that takes advantage of behavioural biases such as confusion, market over or under-reactions, or an inability to rationally combine several pieces of information, could offer attractive returns according to AXA Investment Managers (AXA IM). The investment manager’s proprietary research, Multi Premia Strategy - using behavioural finance with the aim to deliver uncorrelated returns, outlines how biases can affect trading behaviour and cause market volatility. …