Economics

Will the Robots take over the market?

Progress does not stand still and we are not tired of marveling at the technological achievements every day. The investment field, as well as all other fields, has felt the influence of technological progress. No one is surprised by the achievements of trading robots, which often trade much more efficiently than the most experienced trader. But in this area, there are still people who want to trade “in the old-fashioned way,” that is, they prefer to make their own decisions based on accumulated experience. In this article, we will consider the option of combining personal trading with technological innovations. We will talk about one of the most recent technological innovations in the field of capital management and operations on the financial markets.

The first advisor-services for retail customers appeared in the United States in 2008.  The first company, that has offered the market robots consultants was the Betterment Holdings Inc.  Currently, this online investment firm manages assets of more than $8.5 billion and uses several automated private capital management techniques. Also, the market leaders include the American companies Wealthfront, Vanguard Personal Advisor Services, and Schwab.

In addition to the US market, robots-advisors are well represented in Europe. In Switzerland, for example, such services are offered by a number of companies. Among them: Swissquote, True Wealth, Investomat and others.  These robots are also distributed in Canada and India. Last year, the number of funds managed by these advisers reached approximately $200 billion. This year, the number is getting close to $300 billion.

According to forecasts by the Swiss company MyPrivateBanking Research, this trend will continue to develop dynamically. The most popular will be the hybrid form of advisors, where people will complement the computer recommendations. The number of assets managed by such investment policies by 2025 can reach $16.3 trillion (about 10% of the global investment portfolio).

Thus, these services are an excellent option for traders, which are captured by the trade process itself, but who want to improve their efficiency. They are not regulated yet, but in 2017 this issue is planned to be raised. Also, in 2017 there are plans to implement many hybrids, and customers will be able to find the best option for themselves. Up to this point, the results of the users of such robots are much lower than among those who have chosen the algorithmic trading, but who knows, maybe hybrids will be able to solve this problem. Until then, we are keeping a close watch for updates!