Page 30 - Profile's Unit Trusts & Collective Investments - March 2026

Chapter 1 History of collective investment schemes

stock holding on a daily basis in the face of day-to-day changes in share prices – and generating
orders early enough to ensure they are filled – is dependent on computer systems.
Artificial intelligence (AI) and big data analysis is the latest technological advance that is having a
major impact on asset management and investing in general.
Data analysis has always been a key feature in the selection of shares and other securities. AI and
machine learning is now being used to rapidly collect and analyse huge data sets that include market
trends, economic indicators, and customer behaviour helping managers to gain deeper insights into
the securities they select.
AI and machine learning is also being used to optimise asset allocation and the risk management
of portfolios.
Customised risk management for investors may see a new major shift in the collective investment
scheme industry as advisers, wealth managers, and discretionary fund managers take on the
role of providing customised portfolios tailored to individual investor’s investment risk needs and
profiles. The portfolios are expected to make increasing use of listed portfolios, such as exchange
traded funds, actively managed funds, actively managed certficates and listed structured products
offered guarantees on actively managed portfolios. Large global asset managers are making
big data AI-driven risk analyses available to advisers through investment platforms that offer all of
these products.
Products such as hedge funds are also highly dependent on technology from an asset
management point of view. A fund manager making extensive use of derivatives may seek to adjust
his or her portfolio on an hourly rather than a daily basis, and this constant and rapid adjustment of
asset allocation via derivatives frequently depends on automated trading.
Technology has also had a major impact on the way in which financial advisers do their jobs.
Four decades ago financial advisers were completely dependent on printed literature issued
by management companies. Today, it is almost unheard of to encounter a financial adviser not
equipped with a laptop computer on which detailed information about clients and products is available
on an investment platform. Armed with his or her laptop and an internet connection, the modern
financial adviser can download details of a client’s holdings, access up-to-date information on
products, print the latest application forms, and for some products, submit a proposal electronically
without lifting a pen.
The internet has, of course, also had an impact on investors. This goes beyond the immediate
access of up-to-date information which the internet offers. The breadth and depth of information
now available enables well-informed investors to make product comparisons and to conduct
independent research.
Direct access
The growth of the internet led to speculation in the late 1990s that the character of the industry
would change, because of the ease of access to financial products it creates, to the point where
most transactions in the collective investments industry would occur directly between investors and
management companies (or LISPs/platforms) and that the role of financial advisers would diminish.
These predictions seem more relevant today with younger generations increasingly turning
to digital platforms for investments. Investors across the spectrum of age and education show a
greater awareness of the costs of financial advice, partly because of the rise of passive investing,
which challenges the value of active management and, by implication, the value of fees paid to
advisers for fund selection.
In the internet-driven world, the vast majority of retail products in the financial sector can be
accessed by investors directly from product suppliers. This is particularly true when it comes to
investments, but related products like life insurance are also increasingly available online.
Technology experts believe we are only at the start of the Fourth Industrial Revolution (4IR), which
has already changed how consumers interact with service providers (retail investors, for example,
trade shares using free phone apps, and even conservative investors can rebalance portfolios or
switch funds online with the click of a mouse). These developments have made many financial
advisers worried about disintermediation.

28 Profile’s Unit Trusts & Collective Investments March 2026