Q: How major of a roll do algorithms and AI play in the direction of the market today? Will the future be unkind to active managers?
5i Research Answer:
Algorithmic trading plays a part in markets but it often seems to be used as a bit of a 'boogeyman' to explain market movements and while it has a part, we don't think it is a driver of markets on its own and typically is more related to shorter-term trading versus long-term views on markets. On AI, it will certainly have an increasingly important role in being an aid to an investors research process. We might be a bit more skeptical on AI replacing the end decision maker in investing though, as we still find AI has trouble generating unique views on markets/investments (opposed to aggregating broadly agreed upon views). This may change over time but we think it is still a bit soon at this stage.