Uncertainty - Exploring human factors in portfolio construction

Graham Rich  |  Portfolio Construction Forum  |  03 May 2023

Certainty shapes human behaviour. The more certain we are in our beliefs, the more they drive our actions. In contrast, uncertainty can cause anxiety and distress, diminishing our ability to identify opportunities and make rational, good quality decisions. For portfolio construction practitioners, who must build multi-asset portfolios in a volatile, uncertain, complex and ambiguous (VUCA) World, coping with uncertainty is integral to building better quality portfolios. A whole-brain approach to portfolio construction, reflecting knowledge and skill in both the I...

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