The behaviour gap – the tendency for investors to underperform the funds they invest in – is as wide as ever, according to a recent Morningstar report. Morningstar found the average US investor earned a 6 per cent annual return over the last decade, compared to 7.7 per cent for the average fund.

Bad timing was a “persistent drag”, costing investors one-fifth of their fund returns. Importantly, the behaviour gap was wider in funds based on seemingly wise strategies, such as value and small-cap funds. Such funds may be sound, but they are more volatile, resulting in nervy investors making “costly mistakes”.

Irish investors are likely no different when it comes to the behaviour gap, and would do well to heed Morningstar’s advice – keep it simple.