It turns out psychopathic hedge fund managers are less successful investors

Emma Haslett
Follow Emma
Gordon Gekko-types make for less successful investors

We've all come across at least one example: the high-powered Gordon Gekko type who has got to where he is through his own ruthlessness.

But now research has found that, in finance at least, ruthlessness doesn't pay.

A paper published by the Personality & Social Psychology Bulletin has suggested hedge fund managers who display psychopathic traits are actually less successful investors than their kinder counterparts.

The researchers, from the University of Denver, the University of California at Berkeley and investment firm TeamCo Advisers, identified psychopathic, Machiavellian, and narcissistic tendencies in 101 hedge fund managers, and found over the course of 10 years, absolute returns were lower than their less psychopathic peers.

The managers, who had $4.6bn (£3.5bn) under management, averaged returns of 7.27 per cent a year between 2005 and 2015. But the 16 per cent of managers identified as having greater psycopathic tendencies lagged behind the average by 0.88 per cent a year.

Leanne ten Brink, one of the researchers, told Bloomberg it may be because narcissism is often linked with overconfidence, meaning managers were more likely to stick with bad ideas for longer.

She added:

More psychopathic individuals tend to be able to talk the talk, but not walk the walk.

Read more: Why your boss' preference for black coffee could mean they're a psychopath

Psychopaths in the office

The bad news is, it's likely your boss is a psychopath. Last year research by Australian forensic scientist Nathan Brookes found one in five chief executives displays psychopathic tendencies.

Of 261 corporate professionals studied by Brookes, 21 per cent had traits of a psychopath, he said - far greater than the roughly one per cent of the general population who display similar traits.

However, there is such a thing as a "good psychopath". Academic Kevin Dutton and ex-SAS author Andy McNab have argued “good psychopaths” are beneficial to society.

Using fictional examples such as a surgeon who is too empathetic to be able to insert a scalpel into his or her patient, they pointed out the world needs a certain number of psychopaths.

Read more: Here's where Trump sits on the psychopath scale

Related articles