There are few things more satisfying in the investment world than seeing one of your active funds soar in value as its manager’s asset allocation decisions pays off, Mark Northway, investment manager at Sparrows Capital, told thewealthnet.

Mr Northway warned, however, that in reality these unpredictable flashes of outperformance are more often down to luck rather than skill.

“There is a growing bank of academic research suggesting that humans are prone to self-sabotage when it comes to investing because emotion, not rational thinking, governs our market timing calls.

“Our fear of loss can lead u...