Attractive hedge fund managers win business, but it's the shifty-looking ones who generate returns

Sarah Spickernell
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Don't judge a book by its cover (Source: Getty)
Attractive, trustworthy looking hedge fund managers win more business from investors, but they are on average less competent than their shifty-looking colleagues.
Researchers at Tel Aviv University looked at photographs of dozens of hedge fund managers that were publicly available on Google, and judged how attractive and “trustworthy” they looked.
They compared this to the investment returns they had generated and found a clear negative correlation. The more competent an executive looked on first impression, the lower the returns they generated.
"There is no evidence to suggest that perceived trustworthiness predicts actual managerial skill," explained lead researcher Roy Zuckerman.
"On the contrary, we found that the 'trustworthy' managers tended to make less money for investors and more money for themselves by leveraging the way they looked and how they presented themselves. 'Untrustworthy' execs were found to charge lower fees and generate more income for investors and less for themselves."
Yet personal appearance plays a very important role in determining whether an investor will give business – institutions and high net-worth individuals often use face-to-face meetings with hedge fund managers as an important criterion for making investment decisions.
According to Dr. Zuckerman, investors should avoid the simple mistake of buying into the physical appearance of hedge-fund managers. "Hedge fund investors are usually considered to be highly sophisticated, whether they are large institutions or high net worth individuals, and even they make the simple mistake of relying on the looks of hedge fund managers," he said.
"My advice would be to ignore the way a person looks when researching investment opportunities. Ignore your intuition. Focus only on the numbers, look at accounting reports. The idea is to focus on the hard data, and ignore the soft data."

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