According to the Global Investor Study, when the coronavirus pandemic hit the markets in the first quarter of the year, almost 80% of investors decided to restructure their investment portfolios in order to minimize financial losses. Advanced investors were more likely to implement substantial changes in their portfolios: 88% of investors with significant financial knowledge restructured their portfolios, whereas only 57% of those who have little financial knowledge did so.
This seems to make sense. Expert investors are better equipped with the theoretical tools and experience to make informed decisions regarding their portfolios, which in turn should allow them to minimize losses in times of economic distress and outperform non-expert investors during bull markets. But does this commonsense idea fit the evidence? Are financial experts better than the average investor in maximizing portfolio returns?