“Humans aren’t going to be completely replaced, but they will be mostly replaced,” says Sudhir Nanda, head of T. Rowe’s dedicated “quantitative management” arm. In a Financial Times article earlier this year Nanda, who manages T. Rowe’s Diversified Small-Cap Growth Fund, predicted that the traditional management industry will become increasingly technology driven.
He is not the first to turn his attention to this trend. Many asset managers (BlackRock and Goldman Sachs Asset Management included) are dedicating resources to new technology in an effort to stay current in the keenly competitive world of investing. Andrew Haldane, the Bank of England’s chief economist, has shared his view that the huge strides in technology could be lead to an “industrial revolution” in the finance industry that could potentially replace jobs with robots. In a report last March, the Institute of International Finance wrote that technological advances are driving artificial intelligence to a “tipping point” whereby it is “likely to have an outsized impact on functions and employment.”
Bloomberg data reports that Nanda’s fund has outperformed 93% of its peers over the past five years, returning over 10% annually. While the fund manager stressed that T. Rowe’s own human portfolio managers have a “decent” record of navigating financial markets, he also recognized the power inherent in automation. Computers, he said, are “becoming more powerful, so they’re going to do more.”