Past performance is no guide to the future, yet many investors persist in treating it as the only compass.
Fees, by contrast, are the one factor that reliably erodes returns, yet most investors barely notice them.
A new study, Visual Saliency and Investment Decisions, shows this blindness is not inevitable; it is a design flaw.
The researchers recruited 2,000 participants, gave them simplified fund factsheets showing past performance as well as fund fees, and used webcams to track where their eyes wandered.
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The twist was in the formatting: sometimes the fee information appeared in larger font, or to the left of the performance chart, rather than tucked away in small print.
The results were striking. Making fees more visually prominent cut attention to past performance charts by up to three-quarters and increased the time spent on fees.
Investors accordingly shifted 11 per cent more money into lower-fee funds. The effect was strongest when fees were placed where our eyes tend to look first: top left.
The lesson is obvious, if unwelcome to the fund industry. A few typographical tweaks can redirect billions of euros.
Investors are often described as predictably irrational, but at least regulators can nudge our gaze in the right direction.
