The techniques of "Behavioral finance", or behavioral finance, as a tool for understanding, and therefore making the most of, the markets, avoiding the most insidious traps. This is the object of a study conducted by the research area of Monte dei Paschi di Siena Bank which aims to identify the logics that guide the behavior of the operators.
The sample on which it was conducted the analysis consists of 16 equity funds, divided equally between traditional funds and funds which, on the other hand, claim to apply the rules of behavioral finance. The target of the research was to highlight, for each pair of funds, any differences in performance.
The study, which analyzed a period between October 2004 and July 2012, highlighted how, during this period of time, the behavior funds have shown greater earning capacity in favorable moments of the market, but also greater resistance in the most turbulent phasesthus revealing, in terms of risk, a better risk-return ratio compared to traditional funds. Another element brought to the study's attention was that of seasonality, given that behavior funds perform better in certain months of the year (January, May and December).
The full text of the study is attached.
Attachments: Behavioral Finance.pdf
