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​Big investors at crossroads in ‘man vs machine’ shift, survey shows

Most institutional investors believe technological advances such as artificial intelligence (AI) and blockchain will transform the investment industry in the next seven years – but few have used them yet.

After polling 905 investors from 25 countries, Fidelity Institutional Asset Management said its research suggested that institutional investors “appear to be at a crossroads in their understanding of how man versus machine will play out”.

Its Global Institutional Investor Survey reported that 53% institutional investors believed technology would replace traditional investment roles.

However, many said the human connection would continue to be important, with 60% believing AI would augment jobs rather than replace them.

Fidelity also found that institutional investors around the world expected markets and decision-making to become faster, accurate and more efficient as new technologies took hold.

Nearly two thirds (62%) of respondents said they believed trading algorithms and sophisticated quantitative models would make markets more efficient, and 80% thought blockchain and similar technologies would fundamentally change the industry.

Most investors said they expected to rely on AI in the near future for certain business functions: 69% of respondents said they expected to rely on AI for optimising asset allocation in the near future, while 67% foresaw themselves relying on the technology for monitoring and evaluating manager and portfolio performance and risk.

Nearly 40% said they expected to use it to make custom portfolios without the help of asset managers.

However, only 10% respondents told the researchers that they had already fully integrated the technology into investment processes.

Paras Anand, head of asset management, Asia Pacific, at Fidelity International, warned that following new data sources or algorithms should not be done blindly.

“AI is not capable of making investment decisions alone and more data can simply give way to the risk of mistaking mere noise for valuable insight,” he said. “But if carefully considered investors can embrace AI to enhance their process.”

The survey respondents included pension funds, insurance companies and financial institutions with a collective $29trn (€25trn) of assets under management.

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