Robots Won’t Replace the Fundamental Investor

A new study by McKinsey says that traditional asset managers are using advanced analytics to build better decision-making capabilities rather than to replace human portfolio managers. This according to an article in Institutional Investor.

“That means using data science to pinpoint and correct the mistakes investors are making and to focus portfolio managers on problems that only humans can solve,” the article explains, adding, “That’s in contrast to five years ago, when most traditional managers were doing very little with big data, leaving the field open to quantitative managers.”

One of the report’s authors, McKinsey partner Ju-Hon Kwek, argues, “Data can help triage and manage human processing power and precision-target the human mind on specifics that matter.” The difference now, the article points out, is the tremendous volume of data available–which forces traditional managers to become discerning about what to use in their analysis. The report says that managers have been able to use academic research on human behavior to fix some of the more common investing mistakes they have made using data science.