Punctuation can scare off investors more than actual assets!

Forget lengthy disclosures. There’s nothing like punctuation to ward off investors.

According to Bank of Israel research published Tuesday, the simple addition of an exclamation mark to the names of some mutual funds led to significant declines in net flows as retail investors grew warier. The bank calls it the “Exclamation Mark of Cain.”

Events

The MarketCounsel Summit

December 9-12, 2019, Fontainebleau Miami Beach, Miami | A neutral zone of sorts allowing the profession’s leadership to convene and join in the conversation, engaging dialogue and civilized debate, all with the objective of elevating the role of the independent investment advisor.

Events

Conference: In|Vest West

December 5-6, 2019, San Francisco, CA | The digital transformation of the wealth management industry is happening quickly. The industry’s largest players are swiftly adapting to meet ever-increasing customer expectations, and the rest of the field striving to keep pace. Behind the scenes, many firms are increasing technology investments and increasing headcount in an effort to drive growth, but margins remain under pressure. In|Vest West will explore all the dynamics at play—from front to back office—and the technologies that are shaping the future of the firm.

Events

Schwab IMPACT

November 4-7, 2019, San Diego Convention Center | Thousands of advisors, experts, and solution providers come together to find the best strategies for continuing to elevate client service and firm success.

While conventional theories on decision-making hold that investment strategies should be made following rational analysis of qualities like risk, return, or fees, the research paper published Tuesday shows presentation can shape investment behavior.

Michael Nagle/Bloomberg

The paper draws on a study of a 2010 Israel Securities Authority reform that required fund managers to add an exclamation mark to the names of mutual funds allowed to hold high-yield corporate bonds beyond their maximum exposure to equity investments. Only the risk salience was affected, not the fundamentals or information available.

However, the name change also created another impact.

Funds that added an exclamation mark boosted junk bond holdings significantly. “We leave
the further investigation of this behavior to future research,” the researchers wrote.