According to Victor Haghani, founder and chief investment officer of Elm Wealth, retail investors are no more sophisticated than they were 30 years ago and remain subject to behavioral biases, particularly extrapolating recent performance. He says the environment remains difficult for individuals seeking to generate returns above the market, making broad index funds a more suitable option. He adds that Citadel, Jane Street and Hudson River Trading benefit every day from market complexity, but such strategies require capital that retail investors do not have. At RBC Capital Markets, Valerie Grimba nevertheless highlights the usefulness of concentrated funds and derivative-based products while stressing the need to understand their holdings and trade-offs.
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