Fund managers ‘will be replaced by computers’; Standard Life Investments, the global investment manager, has proposed that there will soon be no need for fund managers

September 12, 2013 Leave a comment

Fund managers ‘will be replaced by computers’

Standard Life Investments, the global investment manager, has proposed that there will soon be no need for fund managers. Man has to deal with ‘fear and greed, intellectual constraint and fatigue’, whereas a machine is ‘agnostic, tireless’ and has ‘no bias’ in decision making, says Standard Life Photo: Alamy

By Gabrielle Putter

6:37PM BST 11 Sep 2013

In a report published this month by the investment firm, they argue that long-term strategy fund managers could soon be replaced by machines. “Using artificial intelligence applications have enhanced our understanding and analysis of financial market behaviour, adding to the range of predictive tools,” the investment firm says. While the firm is aware that, traditionally, “investment approaches generally contain both qualitative and quantitative elements”, which means that “in broad terms human thinking may be better suited to the qualitative side while computers are used to varying extents to add value to quantitative inputs”. This looks like it could change.The flaws in human financial decision making are clear and the ability of a computer to “improve the quality of trading decisions…or to speed up the execution of trades” is too great to ignore.

Standard Life presents a simple argument: “Man” has to deal with “fear and greed, intellectual constraint and fatigue”, whereas a machine is “agnostic, tireless” and has “no bias” in decision making.

Frances Hudson, Standard Life’s global thematic strategist, said that “artificial intelligence applications have enhanced our understanding and analysis of financial market behaviour”, and “artificial intelligence, which is commonly used in short-term market analysis… may also be applied here [to longer-term investments]”.

While computer algorithms are not a new thing in themselves – dating back to the 1950s and 1960s and used today for high frequency trades – the view that “long-term investors can benefit from a computer’s consistent application of collective intelligence to financial markets” is increasingly strong.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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