The best hedge fund managers are not psychopaths or narcissists, according to new study

October 19, 2017

Washington, DC - When it comes to financial investments, hedge fund managers higher in "dark triad" personality traits - psychopathy, narcissism, and Machiavellianism - perform more poorly than their peers, according to new personality psychology research. The difference is a little less than 1% annually compared to their peers, but with large investments over several years that slight underperformance can add up. The results appear in the journal Personality and Social Psychology Bulletin, published by the Society for Personality and Social Psychology.

While the average person doesn't invest in hedge funds, "We should re-think our assumptions that might favor ruthlessness or callousness in an investment manager," says Leanne ten Brinke, lead author and a social psychologist at the University of Denver. "Not only do these personality traits not improve performance, our data suggest that they many hinder it."

Researchers from the University of Denver and the University of California, Berkeley, measured personality traits of 101 hedge fund managers, then compared the personality types with their investments and financial returns from 2005 - 2015. They compared not only the annualized returns, but also risk measures.

The researchers found managers with psychopathic traits made less profitable investments than peers, by just under 1% per year, but this can add up over the course of years on large investments. Managers with narcissistic traits took more investment risks to earn the same amount of money as less narcissistic peers.

Some may be surprised that most hedge fund managers rank pretty low on the Dark Triad traits. However, the results did show correlations between personality traits, investment success, and risk management.

These findings build on their earlier work, studying behavioral evidence of Dark Triad traits in U.S. Senators, and finding that "those who displayed behaviors associated with psychopathy were actually less likely to gain co-sponsors on their bills," says ten Brinke. That study also showed those who displayed behaviors associated with courage, humanity, and justice, "were the most effective political leaders."

The results add to a growing body of literature suggesting that Dark Triad personality traits are not desirable in leaders in a variety of contexts, summarizes ten Brinke.

"When choosing our leaders in organizations and in politics," write the authors, "we should keep in mind that psychopathic traits--like ruthlessness and callousness--don't produce the successful outcomes that we might expect them to."
-end-
Personality and Social Psychology Bulletin (PSPB), published monthly, is an official journal of the Society for Personality and Social Psychology (SPSP). SPSP promotes scientific research that explores how people think, behave, feel, and interact. The Society is the largest organization of social and personality psychologists in the world. Follow us on Twitter, @SPSPnews and find us on facebook.com/SPSP.org.

Society for Personality and Social Psychology

Related Personality Articles from Brightsurf:

Infant temperament predicts personality more than 20 years later
Researchers investigating how temperament shapes adult life-course outcomes have found that behavioral inhibition in infancy predicts a reserved, introverted personality at age 26.

State of mind: The end of personality as we know it
In a study published today researchers propose that changing states of mind are holistic in that they exert all-encompassing and coordinated effects simultaneously on our perception, attention, thought, affect, and behavior.

Want to change your personality? It may not be easy to do alone
Most people want to change an aspect of their personality, but left to their own devices, they may not be successful in changing, research shows.

How personality predicts seeing others as sex objects
Several personality traits related to psychopathy -- especially being openly antagonistic -- predict a tendency to view others as merely sex objects, finds a study by psychologists at Emory University.

Scientists say you can change your personality
A review of recent research in personality science points to the possibility that personality traits can change through persistent intervention and major life events.

Personality traits affect retirement spending
How quickly you spend your savings in retirement may have as much or more to do with your personality than whether you have a lot of debt or want to leave an inheritance.

For the first time: A method for measuring animal personality
A study on mice shows animal research may need to take into account the connection between genes, behavior and personality.

Your spending data may reveal aspects of your personality
How you spend your money can signal aspects of your personality, according to research published in Psychological Science, a journal of the Association for Psychological Science.

The sun may have a dual personality, simulations suggest
A deep dive into the sun's interior provides new clues to the forces that govern that star's internal clock.

A personality test for ads
People leave digital footprints online, and this information could helps marketers personalize ads based on individual personality types.

Read More: Personality News and Personality Current Events
Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.