As if professional mutual fund managers didn't have it hard enough. Not only do they have to contend with the growing popularity of low-cost index funds, which simply buy and hold the entire market, but now here comes another threat: robot stock pickers. The San Francisco firm EquBot has launched the first retail ETF to be managed using IBM's Watson supercomputing artificial intelligence technology. The use of computers to buy stocks isn't new. So-called "quant funds" (short for quantitative analysis) have been around for years, relying on computer algorithms to identify short-term trading patterns and opportunities in the market.

Financial technology is disrupting traditional approaches to investing, and BlackRock Inc.'s recent announcement that it is replacing human stock pickers with machine-run algorithms for some of its equity funds, signals that the money management industry is getting the message. The decision by BlackRock, which has more than US$5 trillion in assets under management, follows a similar move by the world's largest hedge fund, Bridgewater Associates (US$160 billion in AUM), to start using software to automate its day-to-day decision making. The popularity of computerized quantitative trading strategies, and the growing use of artificial intelligence (AI) techniques, stems in large part from their impressive returns. AI and machine learning hedge funds outperformed both traditional quantitative and the average global hedge fund, with annualized gains of 10.6 per cent over a two year period, according to Eurekahege. These new machine-based funds also posted better risk-adjusted returns, with considerably lower volatility. "The application of AI in the investment management industry is still in the early stages, however we believe that increasing consistency and profitability will likely drive continued investor interest," said Stephanie Price, an information technology analyst at CIBC World Markets.

A new report on the world's largest money manager, BlackRock, Inc., has revealed that it will be thinning the ranks of its human stock pickers, and transitioning toward algorithmic solutions. It's a stark example of algorithms directly taking people's jobs, and while the move is only tentative for now, it shows that soon even the world's most lucrative professions will be vulnerable to the oncoming wave of automation. The move comes in the wake of a troubling year for the conventional, so-called "actively managed" investment management business. In general, investors are starting to question whether having their money managed by a real human being is worth the vastly higher fees -- sometimes dozens of times higher than management through the application of simple rules, like following certain market indicators. Faith is waning in both the raw return on investment a human advisor can provide, and the value of being able to talk to a person who is specifically tasked with handling your financial future. Though there are no real details about the specifics of how these programs work (and, short of a leak, there won't be any coming), these new products have been available in some form for a while, previously locked away for large investors only.

The largest fund company in the world, BlackRock, has faced a thorny challenge since it acquired the exchange-traded-fund business from Barclays in 2009. These low cost, computer-driven funds have exploded in growth, leaving in the dust the stock pickers who had spurred an earlier expansion for the firm. The rise of passive investing -- exchange-traded funds, index funds and the like -- has revolutionized the investment world, providing Main Street investors with greater opportunities at lower fees while putting pressure on even Wall Street's biggest money managers. Now, after years of deliberations, Laurence D. Fink, a founder and chief executive of BlackRock, has cast his lot with the machines. On Tuesday, BlackRock laid out an ambitious plan to consolidate a large number of actively managed mutual funds with peers that rely more on algorithms and models to pick stocks.

Robots are predicted to steal the jobs of millions of workers across the world over the next few years, as technology replaces human shop assistants, teachers, accountants and potentially even taxi drivers. Artificial intelligence and automation are also expected to revolutionise the investment industry, especially in the area of robo-advice. This is where algorithms are used to suggest funds to investors, replacing some human financial advisers in the process. Less spoken about is the impact robotics and artificial intelligence could have on the role of the portfolio manager. But commentators believe many fund managers' jobs could come under threat as developments are made in technology.