Ch.10 · Benchmarks and Performance Evaluation · medium
What is the 'behavioural bias' of panic selling and how does it harm mutual fund investors?
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EXPLANATION
Panic selling is one of the most harmful investor behaviours — redeeming equity fund investments when markets fall sharply locks in losses and means investors miss the recovery. Studies show that average retail investors earn significantly less than the funds they invest in due to poor timing — buying after rallies and selling during downturns. Distributors play a key role in preventing panic selling.
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