Who’s a better investor: Computer or fund manager?
Computers have several advantages over human beings – they are unbiased, willing to admit mistakes and quick to make decisions – and advances in artificial intelligence mean they could become even more crucial to the investing industry.
Already an indispensable aspect of the financial sector, computers are becoming increasingly important, according to a recent report by Standard Life Investments, the fund manager.
"Machines are unbiased, agnostic, not anchored to previous experience and tend to be quicker," Frances Hudson, global thematic strategist, told CNBC. She also praised computers for their "consistent application of collective intelligence to financial markets."
(Read more: Would You Take Financial Advice From an Algorithm?)
However Hudson also warned that when computers "become the major drivers of markets", "increased systemic risk" is the result.
Computer algorithms were credited with causing the 2010 "flash crash," after high-frequency traders started aggressively selling. At that point, more than 60 percent of U.S. equity trades were accounted for by HFT, according to Bloomberg. The industry has become less profitable since then.
It all has echoes of Robert Harris's novel The Fear Index, in which a computer designed to spot good hedge trades becomes more intelligent than the man who created it.
(Read more: The Fear Index and career paths)
Before fund managers start preparing their P45s, they can take some comfort from Hudson's belief that machines will never overtake man.
"Human beings still have the edge when it comes to innovation and judgement," she said.
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