God from the machine: most Russians are ready to invest with the help of AI
Immediately, 60% of respondents are ready to purchase investment instruments controlled by artificial intelligence. This is evidenced by the results of a study conducted by the Moscow Stock Exchange. 62% of respondents trust AI in investment matters. However, the vast majority of Russians (89%) consider human control to be an important factor in using artificial intelligence in investments. One of the reasons for investors' interest in AI is due to the fact that it is able to process huge amounts of data that are not available to either a broker or an investment manager, experts explain. How the use of artificial intelligence will affect the stock market is described in the Izvestia article.
Investing in innovation
More than half of private investors are ready to purchase investment instruments controlled by artificial intelligence. This answer was given by 60% of respondents surveyed by the Moscow Stock Exchange. At the same time, 89% of Russians noted that human control remains an important factor for them when using AI in investments.
28% of the respondents are not ready to purchase investment instruments controlled by artificial intelligence without human intervention. In turn, 13% found it difficult to answer.
62% of respondents trust AI in investment matters. 27% do not trust. The remaining 11% could not answer this question.
Among those who are ready to buy AI investments, almost half (45%) are people aged 35-44 years. Most of them (60%) are residents of cities with a population of one million. 36% of respondents in this category invest several times a month. According to 29% of respondents, they invest several times a week or once a month or less. And 6% invest daily.
It is noteworthy that 75% of Russians are ready to pay a commission for trusted AI management right away. Moreover, 48% believe that it should be equivalent to the amount that the management company will receive. 20% believe that it is necessary to pay less for managing artificial intelligence than for working with a criminal code. And 7% are sure that the amount should be more. This category of respondents believes that the average commission should be 12% higher. Those who prefer to pay less want a 3% reduction.
The most common barriers to trusting AI in the field of investments in the study are the risk of errors or "hallucinations" (52%) and fear for the safety of personal and financial data (44%). 32% of respondents identified a lack of experience or knowledge to work with AI tools. 30% of respondents named the lack of transparency in algorithms.
The study, according to Viktor Zhidkov, Chairman of the Board of the Moscow Stock Exchange, confirms the thesis that artificial intelligence is changing the logic of investment decisions.
"Already today, the AI assistant allows the user to instantly receive an interpretation of important news and an understandable analysis of company reports. And in the future, AI can become an intermediary for the formation of a class of "intelligent investor" and help overcome the barrier associated with insufficient financial literacy," he is convinced.
The use of artificial intelligence in asset management and customer service in the investment sector will only grow, as well as in many other areas of activity, the Moscow Exchange noted in an interview with Izvestia.
—AI solutions can potentially significantly simplify access to investment tools for the widest audience: compensate for lack of knowledge, remove the barrier of insufficient financial literacy and act as an effective assistant for any type of investor, including beginners," the press service explained.
Professional financiers, in turn, can use AI solutions to obtain a powerful tool for systematization and analysis of large amounts of data for further use in their activities, the exchange said. This will allow them to speed up their investment decisions.
Betting on speed
AI has been used in investments for a very long time, at least since the 70s of the last century, recalls Alexander Didenko, head of the artificial Intelligence laboratory at the Moscow School of Management Skolkovo. Nobel laureates Harry Markowitz, Eugene Famm, and Kenneth French, in particular, had companies for automated pension portfolio management and factor investing. In fact, we are talking about using specialized financial AI, the expert points out.
Investors' interest in such solutions is understandable, says Denis Astafyev, an entrepreneur, fund manager and founder of the SharesPro fintech platform. One of the reasons is due to the fact that artificial intelligence is able to process huge amounts of data that are not available to either a broker or an investment manager.
— He is also not subject to emotions and is not guided by personal gain, unlike some consultants who find it important to promote certain products for the sake of a commission. Therefore, investors have a feeling of greater objectivity and transparency — the machine does not impose decisions," explains the interlocutor of Izvestia.
In addition, investors' interest in AI is due to its ability to simultaneously analyze issuers' financial statements, macroeconomic indicators and market signals, assessing risks in a complex, lists Elena Golyaeva, business architect of the Reksoft Banking and Finance Department. This approach saves time and significantly improves the speed and quality of decision-making, which is critically important in the financial market.
"AI allows long—term investors to form more stable and balanced strategies, while active traders and scalpers can more accurately determine entry and exit points, promptly responding to micro—market movements and expanding the possibilities of algotrading," the expert clarifies.
The illusion of control
And although algorithms give the investor the illusion of control — when the rules of decision-making are algorithmized, you can run AI on historical data and see "how it would be— - this approach has many pitfalls, warns Alexander Didenko.
— For example, an algorithm developer can adjust its parameters so that everything looks positive in history. At the same time, the beautiful upward and rightward curving capital curve looks tempting and has a hypnotic effect on the investor, even if you warn him about the risks of a backtest," he points out.
At the same time, some algorithms lower the investor's entry threshold, since they are able not only to choose financial assets or time for purchases and sales of individual instruments, but also profile a person, selecting an individual portfolio based on his age and psychological characteristics, the expert clarifies.
It is also worth noting that "AI in investment" is an umbrella term that implied a variety of tools. And the openness of investors to such instruments says that they do not trust an alternative — a person who manages their capital, collects a portfolio or gives financial advice, Didenko is convinced.
However, the amount of funds that private investors are willing to entrust to the car remains limited today, Denis Astafyev draws attention.
"In global practice, less than 40% of investors agree to fully rely on AI when making decisions, largely due to concerns about failures, errors and so—called hallucinations of artificial intelligence," the expert notes, noting that trust in such technologies is still being formed and there are many subtleties and nuances in this process.
By itself, the use of AI in investment activities is safe if the principles of transparency of algorithms, data quality and human control are observed, Elena Golyaeva believes. This tool significantly improves the accuracy of the analysis and reduces the influence of subjective factors. But the final decision should remain with the expert.
— At the moment, AI should be considered precisely as a tool for enhancing analytical capabilities, rather than replacing them, — the Izvestia interlocutor believes.
Crash test for intelligence
The use of AI can increase the efficiency and liquidity of the stock market, admits Elena Golyaeva. Algorithms, in her opinion, will be able to increase the speed of analysis and reaction to market signals, which can lead to more accurate pricing and lower spreads.
— The development of AI can also simplify entry into the market — new intelligent services and assistants will appear, making investments more accessible to private investors and contributing to the growth of the number of traders and the volume of transactions, — the interlocutor of Izvestia does not exclude.
Regarding the impact of artificial intelligence on the stock market, two directions of its use can be distinguished, Denis Astafyev believes. The first is the automation of decision—making processes: increasing the speed of analysis, accuracy and efficiency. But this tool is usually available to large players, not retail investors.
The second is the use of artificial intelligence in long—term strategies, the expert adds. Algorithms analyze statistics and compare instruments based on historical data, concluding that the fewer actions an investor takes, the higher his final return.
— This approach makes investments more stable, but less profitable for brokers and consultants who earn on commissions. In the long term, the widespread use of AI can reduce market volatility and change the very structure of the investment business," predicts the source.
At the same time, new risks will appear, as many strategies may act in a similar way. In particular, in stress phases, liquidity may decrease more rapidly, Golyaeva warns.
"Therefore, it is important to maintain clarity of the principles of AI application, maintain human control and develop reliable regulatory mechanisms so that technology development makes the market more stable rather than more vulnerable," she urges.
Theoretically, algorithms should make markets more efficient, lower the entry threshold for investors, and increase the speed and accuracy of market reactions to relevant economic news, confirms Alexander Didenko. In practice, there are still systematic deviations of algorithms and regular flash crashes (a rapid, deep and unstable drop in securities prices that occurs over a very short period of time, followed by a rapid recovery).
However, it is important to understand that artificial intelligence can be different, because there are different models and levels of machine learning "add-ons", Astafyev draws attention.
— And until the global economy is faced with a serious crisis of the new cycle, it is difficult to say exactly how these systems will behave in the face of sharp market fluctuations. Only then will it become clear to what extent AI is really capable of making effective investment decisions," he concludes.
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