Investment Management Services Research Articles

Research on Generative Artificial Intelligence for Virtual Financial Robo-Advisor

This research explores the intersection of artificial intelligence and finance, focusing on the emergence of intelligent investment advisers, commonly known as Robo-advisers (RAs). These RAs utilize robust computer models and artificial intelligence algorithms to deliver personalized asset management investment plans for users. Notably, Wealthfront is highlighted as a prominent platform in this field, offering automated investment management services aimed at optimizing investment returns. The study investigates the impact of users' past investment performance on their adoption of intelligent advisers, considering factors such as previous defaults and recent investment performance. It reveals that frequent adjustments to the use of intelligent advisers may hinder long-term investment objectives, emphasizing the importance of consistent usage to fully capitalize on their benefits. Furthermore, the research emphasizes the significance of transparency, user-friendly interaction design, and tailored financial services to foster user trust and enhance the optimization of intelligent advisers' design.

Artificial Intelligence in Banking and Finance

Artificial intelligence (AI) has revolutionized the banking and financial industry by improving client relations, precision, and operational efficiency. This paper explores the use of artificial intelligence (AI) in banking and finance, including topics like credit scoring, fraud detection, investment management, and customer service. This research aims to identify the benefits and difficulties associated with the integration of AI in the financial sector by a comprehensive analysis of the body of existing literature. The results highlight how AI technologies have significantly improved decision-making, reduced operating costs, and increased overall profitability. Nonetheless, in order to guarantee the ethical and sustainable application of AI in the future, it is crucial to address issues with data privacy, prejudice, and ethical reasons.

The Impact of Financial Technology on Customer Behavior in the Jordanian Commercial Banks

This study investigated impact of financial technology on customer behavior in Jordanian commercial banks. The descriptive technique was employed based on the study of the research topic. The study population consisted of all administrative workers in Jordanian commercial banks. The data was collected through a random sample of administrative workers in Jordanian commercial banks, estimated at 300 male and female employees. The statistical package for the social sciences program was used to examine the data after obtaining it using the questionnaire (SPSS). The results showed that there is a statistically significant positive effect of financial technology (credit service, payment services, investment management services, financial market support services) on customer behavior in Jordanian banks, which indicates that (financial technology) explained an amount (84.1%) of the change in customer behavior in Jordanian banks. Banking will unquestionably concentrate on delivering financial services through data in the future, limiting the ability to react. By enhancing the promise of value, financial institutions that have been able to quickly adapt to financial innovations boost client loyalty and happiness. The study recommends that Jordanian banks, in light of global competitiveness and the global trend towards digital transformation, follow the financial technology approach and make the most of the opportunities and advantages offered by digitization to banks in order to preserve their customers and compete. The study also recommended researchers and those interested in banking studies expand their research on financial technology due to the relative lack of studies covering the subject.

A STUDY ON LIC SCHEMES WITH REFERENCE TO CHILDREN AND WOMEN

Indian financial system is highly influenced by the banking and insurance sector which attracts a flow of savings and investments to the country. The Insurance sector in India is one of the growing sectors of the economy. The insurance sector, along with other elements of marketing, as well as financial infrastructure, have been touched and influenced by the process of liberalization and globalization in India. The customer is the king of the market. Life Insurance Company(LIC) deals in Intangible products, such as Insurance plans, Pension Plans, Unit Linked Plans, Micro Insurance Plans, Withdrawn Plans and, Health Plans. The process of insurance has evolved to safeguard the interests of people from uncertainty by providing certainty of payment at a given contingency. Issuing insurance policies at affordable rates helps to protect the capital of the people by investing funds into government securities. It provides customized insurance solutions based on their unique financial needs and risk profile, as well as assistance in resolving them. LIC is an insurance firm headquartered in Mumbai with 8 zone offices and 101 divisional offices. LIC provides mutual funds, health insurance, and investment management services in addition to life insurance. LIC is India’s largest firm, with 2048 completely computerized branches, 8 zonal offices, 113 divisional offices, 1381 satellite offices, and corporate offices spread around the country. In various Indian cities and towns, the country is divided into 54 customer zones and 25 service centers. For selling life insurance to the general public, LIC has 1,337,064 individual agents, 242 corporate agents, 89 referral agents, 98 brokers, and 42 banks. LIC aims to deploy the funds to the best advantage of the investors and the community as well. This research paper attempts to study the various schemes for a child and women, to know the factors influencing the choice of investors in choosing LIC Policy, and to analyze the performance of LIC by knowing customers' opinions.

The Impact of Artificial Intelligence on the Financial Services Industry

With the rapid development of artificial intelligence (AI) technology, the financial services sector is beginning to widely utilize these advanced technologies to improve efficiency, optimize decision-making, and ultimately improve customer satisfaction. However, despite the enormous potential that AI brings, its application also raises a host of questions about data privacy, security, and ethics. This paper will explore the application of AI in financial services and its possible impact. AI is already playing an important role in many financial services, including investment management, risk assessment, fraud detection, and customer service. For example, AI can help financial institutions make more accurate investment decisions through pattern recognition and predictive analytics. In risk assessment, AI can analyze large amounts of data to identify patterns that could lead to loan defaults or credit risk. In addition, AI chatbots and virtual assistants are changing the way customer service is done, providing 24/7 service and improving the customer experience. However, the widespread adoption of AI also brings new challenges. First, data privacy and security issues are a big concern, as AI often needs to deal with large amounts of personal and sensitive data. Second, transparency and explain ability of AI decisions are also a big problem. Due to the "black box" nature of some AI models, such as deep learning, the decision-making process can be difficult to understand, which can lead to public distrust of AI decision-making. Finally, AI could lead to the disappearance of jobs, especially those with low skills that can be automated. Therefore, in order to make the most of the opportunities brought by AI and effectively address the challenges it brings, we need to think deeply and discuss at multiple levels such as technology, policy and ethics. Future research could explore more deeply the specific applications of AI in financial services and how to design and implement effective strategies to manage the use of AI to ensure that the benefits outweigh the potential risks.

Integration Analysis of Sharia Stock in Malaysia and Indonesia

The linkage of the Indonesian capital market with foreign capital markets began after foreign investors were allowed to participate in buying shares listed on the IDX where Indonesia is an emerging market. According to Mobius (1996), from the external side, countries including emerging markets can develop rapidly on the grounds that investors are willing to invest in international markets, investors use investment management services, and the need for diversification to avoid sudden turmoil in one market. Model nonlinear in economic and finance riset are often found. One model that can be used to capture nonlinear relationships in data is Threshold Vector Autoregressive (TVAR) model. TVAR model is generalization of VAR model, it divides the time series into different regimes that are separated by a different threshold. The purpose of this research are to see the effects between sharia stock index in Malaysia (DJMY) and Indonesia (JII), and to know the performance with TVAR model. DJMY and JII produce TVAR on lag one with two threshold and three regimes. Each regimes shows different effects.

Does fintech innovation improve bank efficiency? Evidence from China’s banking industry

This paper examines whether the development of the financial technology (fintech) industry affects cost efficiency and the technology adopted for China’s banking industry over the period 2003–2017. Fintech industry development indices are constructed using fintech enterprise-level data, and these indices measure the development extent of entire fintech industry and four sub-industries including (1) credit, deposit and capital–raising services, ​(2) payment, clearing and settlement services, (3) ​investment management services ​and ​(4) market support services. The relevant efficiency scores for Chinese banks under different ownership structures are measured by applying the stochastic metafrontier approach. The results show that state-owned commercial banks have the lowest cost efficiency and operate under inferior technology. When considering the influence of fintech development, fintech innovations not only improve the cost efficiency of banks, but also enhance the technology used by banks. This double beneficial effect is more significant in the case of market support service innovations.

Robo-Advisory: From Investing Principles and Algorithms to Future Developments

Advances in financial technology have led to the development of easy-to-use online platforms referred to as robo-advisors or digital-advisors, offering automated investment and portfolio management services to retail investors. By leveraging algorithms embodying well-established investment principles and the availability of exchange traded funds (ETFs) and liquid securities in different asset classes, robo-advisors automatically manage client portfolios that deliver similar or better investment performance at a lower cost as compared to traditional financial retail services. In this chapter we explore how robo-advisors translate core investing principles and best practices into algorithms. We discuss client onboarding and algorithmic approaches to client risk assessment and financial planning. We review portfolio strategies available on robo-advisor platforms and algorithmic implementations of ongoing portfolio management and risk monitoring. Since robo-advisors serve individual retail investors, tax management is a focal point on most platforms. We devote substantial attention to automated implementations of a number of tax optimization strategies, including tax-loss harvesting and asset location. Finally, we explore future developments in the robo-advisory space related to goal-based investing, portfolio personalization, and cash management.

Is the VAT Exemption for the Management of Special Investment Funds Applicable on a Purchased Investment Management Service (by Using an IT Platform) if the Service Is a Single Supply and Is Used for the Management of Both SIFs and Non-SIFs?

This article discusses the judgment of the Court of Justice of the European Union in the BlackRock Investment Management case, on the application of the VAT exemption for the management of special investment funds.

An Analysis of the Nigerian Gas Sector in Relation to the Policies Legal and Institutional Framework: The Need for Reform

Nigeria is a gas economy with specs of oil in it thrives on its constant exploitation of its oil resources with little regard for the full exploitation and utilization of its gas resources. Nigeria holds an estimated 190 trillion Cubic feet (Tcf) of proven natural gas reserves comprising associated gas and non-associated gas, making her the 9th largest gas reserve holder in the world and the largest in Africa. The road for reforms in the Nigerian oil and gas industry began with the inauguration of the oil and gas implementation committee in the year 2000 under the Olusegun regime which brought out a draft petroleum industry bill which later was changed into various versions before being passed on May 25, 2017. As the petroleum industry governance bill with the creation of a new regulatory NPRC (Nigerian Petroleum Regulatory Agency), which will take over the petroleum inspectorate, the department of petroleum resources, the petroleum products pricing Regulatory Agency. Also, two new companies were created under the bill, which includes; Nigerian Petroleum Assets Management Company and the Nigerian Petroleum Company, where the assets and liabilities of the Nigerian National Petroleum Corporation will be shared by these companies and the National Petroleum Company will operate as a fully independent commercial entity. Before this development, the gas industry in Nigeria lacked proper policies, structure, a regulatory and institutional framework to implement policies. This led to the creation of the Nigerian Gas Master Plan which was a blueprint to ensure a wholly competitive, market-driven domestic gas sector by increasing the supply of gas into the domestic market. This plan led to the National Domestic Gas Supply and Pricing policy coming into place, which brought with it the Domestic supply Obligations (DSO) supported by the Domestic Supply Obligation Regulations, given to various oil producers to close supply gaps in the domestic gas market and institutions such as the Nigerian Gas Company, Gas Aggregation Company of Nigeria were created as major agents to ensure the commercialization of gas in Nigeria’s domestic market. The National Domestic Gas Supply and Pricing Policy were backed up by the National Domestic Gas Supply and pricing regulation. All these policies, regulations, and more have helped in the building up of the gas industry in Nigeria. Also structurally with the aid of the gas network codes, Nigeria will be able to have a detailed outline of its present pipeline system structures all over the country and the work-ability of the systems available. Though we as a nation can boost the West African Gas Pipeline, which is a trans-boundary pipeline system for the exportation of gas to West African countries. Also, there is the Escracvos Lagos Pipeline Systems (ELPS) which transport gas to various power plants within Nigeria. The National Petroleum Investment Management Services (NAPIMS) has assisted in the enhancement of the gas industry and the power sector through its joint venture with various international oil companies for the exploitation of gas and through the DSO scheme supplies gas to various IPPs in Nigeria thereby curbing the current power crisis gradually.

Personalized goal-based investing via multi-stage stochastic goal programming

In this paper, we propose a goal-based investment model that is suitable for personalized wealth management. The model only requires a few intuitive inputs such as size of wealth, investment amount, and consumption goals from individual investors. In particular, a priority level can be assigned to each consumption goal and the model provides a holistic solution based on a sequential approach starting with the highest priority. This allows strict prioritization by maximizing the probability of achieving higher priority goals that are not affected by goals with lower priorities. Furthermore, the proposed model is formulated as a linear program that efficiently finds the optimal financial plan. With its simplicity, flexibility, and computational efficiency, the proposed goal-based investment model provides a new framework for automated investment management services.

Stabilizing Business Cycles by PLS Banking and Ethic Economics

In addition to discuss economic cycle’s theories in this paper by decomposing money market into two markets of "saving-depositing" and "investment-credit facilities", we study the time structure behavior of depositor-bank-investor and conclude that the traditional banking structure creates fluctuations in money sector and interest rate. These fluctuations affect the real sector through saving and investment and undulate the economy as well. Mathematical derivations show that banking structure is one of the main factors of economic cycles. Therefore, the abolition of usury (Riba) is proposed as the solution to relate directly investment to saving via The Rastin Profit and Loss Sharing Banking. In this framework, the bank offers investment management services and obtains commission. In The Rastin Profit and Loss Sharing Banking risks are practically transferred from credit facility sector (loans) to deposit sector and bank does not face any losses. On the other hand, the creation of a strong structural relationship between the interest rate of deposits and credit facility interest rate does not let any losses to occur in the capital market while there is profit in the deposit market. This concept is against the conventional banking system in which if the borrower obtains profit or loss; he has to pay interest (profit) to the depositor.The second pathological defect of economic crisis is the excessive consumption and economic greed and similar bad habits which expand economic cycles. The adjustment of mankind behavior, according to Islamic and other divine religions ethical and mystical tuitions, will practically prevent the intensity of crises. Prevention of extravagance frees a large portion of economic resources, and therefore, the magnitude of the business cycle will be reduced, and economic stability will be relatively increased.

Towards a Cross-Sectoral European Depositary Passport in European Investment Law

A few decades after the four freedoms were introduced that allowed several types of financial intermediaries the freedom to provide services throughout all EEA Member States, it appears that this right is still undermined for depositaries providing services in European investment law. Interesting enough a de facto passport in this field already exists. CRD IV, IORPD II and MiFID II all regulate the safekeeping of securities and the provision of custody services. MiFID II lists the provisions of safekeeping services, including custodianship for financial instruments, as ancillary service and allows this service to be ‘passported’, in addition to, the principle investment activities/services for which investment firms are authorized. Similarly, CRD IV allows the safekeeping of securities and the provision of custody services to be passported, in addition to, the principle deposit-taking activity of credit institutions. Under IORPD II the safekeeping of securities and the provision of custody services are subject to a mutual recognition approach. IORPD II allows, in addition to UCITS/AIF depositaries, investment firms and credit institutions harmonized under the CRD IV and MiFID II to be appointed as a depositary regardless whether the depositary is established in the IORP home Member State. The PEPPR does not regulate this issue and, thus, also allows for a de facto depositary passport. Notwithstanding the fundamental principle of freedom to provide services, the AIFMD and UCITSD V only allow UCITS (ManCos) and AIFMs to appoint a depositary which is established or has a branch office in the EEA Member State in which the respective UCITS or AIF is established. Strictly speaking, credit institutions or investment firms which are under CRD IV, MiFID II and IORPD II allowed to provide custody services on a cross-border basis, may not exercise ‘passporting rights’ under the UCITS V and AIFMD, because these European directives preclude depositaries from doing so. It is therefore worthwhile to investigate whether depositaries under the AIFMD and UCITSD V should be allowed to enjoy passporting rights and whether and to what extent this fits in under the current ‘de facto passports’ available under European investment law. To that end, this contribution first discusses the inconsistencies in granting an European passport to depositaries/custodians under the European investment laws, i.e. the ‘European depositary passport paradox’. Second, the differences and similarities between depositaries and custodians under these laws are considered by applying the legal interpretation methods of Von Savigny on the study of positive norms to assess whether a differential treatment for the purpose of granting a European passport to (AIF/UCITS) depositaries is justified. Furthermore, this contribution addresses under what conditions a European/TC passport could be granted to (AIF/UCITS) depositaries. It concludes by suggesting a cross-sectoral depositary passport that could be considered and modelled after the cross-sectoral passport for investment management services.

Asia: A Lucrative Destination for Investment Banking

Purpose: The study aims to identify the reasons for the increase in the number of captive operations in urban Bangalore, which earlier was confined only to middle office and back end office but now venturing into front end office. Design/Methodology/Approach: The study includes 50 respondents, employees in the leading foreign-based investment banks operating in urban Bangalore, applying the snowball sampling method through a structured questionnaire. Business model, strategy, database, customized product, market research, operating cost, and employment are the variables. SPSS has been used to test the hypothesis through One-way ANOVA (Analysis of Variance). Findings: Employment, operating cost, and analytical skills are the key human resource factors impacting the performance. Business models, strategies, and customer database, are the significant factors of asset management. Attractive business avenues, eminent personnel, customer database are the formative factors of quality management. Job roles, portfolio seeding, segment business are the most highly influencing performance factors in offering excellent service to the clients by these banks as they are significant at 0.001 per cent level. Originality/Value: Investment banking reflects being one of the distinct segments which facilitates in capital formation, financial consultancies, advisory services, security trading, custodian services, investment management services, corporate actions, etc. This sector has transformed into a promising one in boosting the economy and financial services post-globalization. Most of the Asian nations are promising to be a silver line for the US and UK based Investment banks operating in Bangalore.

Practical Applications of A Comparative Analysis of Performance Fees

In <b><i>A Comparative Analysis of Performance Fees</i></b>, from the Summer 2018 issue of <b><i>The Journal of Portfolio Management</i></b>, <b>Megan Czasonis</b>, <b>Baykan Pamir</b>, <b>David Turkington</b> (all at <b>State Street Associates</b>) and <b>Mark Kritzman</b> (of <b>Windham Capital Management</b>) compare flat-fee structures for investment management services with performance-based fee structures. They demonstrate that determining an investor’s preference among different possible fee structures depends on the complex interplay of the fee structure, the expected performance of the investment portfolio, and the investor’s attitude toward risk. The authors argue that the appropriate approach for evaluating performance fees and comparing them with an alternative flat fee is to simulate the distribution of after-fee returns and, given a particular utility function for investors, to use the certainty equivalent of the after-fee return distribution to determine the appropriate fee structure. The authors also explain how the asymmetric nature of performance fees causes the distribution of net returns to be non-normal, even if before-fee returns are normally distributed. This can cause biased results when using tools that treat net returns as normally distributed. <b>TOPICS:</b>In portfolio management, portfolio management/multi-asset allocation

Adoption of financial technology (Fintech) in mutual fund/ unit trust investment among Malaysians: unified theory of acceptance and use of technology (UTAUT).

Disruptive innovation is related to financial technology and known as FinTech. It includes design, delivery, and provider of financial investment services such as payments, real estate, investment, insurance/ takaful, deposits, financing, banking, saving and capital market. This study is about Adoption of Financial Technology (FinTech) in mutual fund/ unit trust investment among Malaysians: Unified Theory of Acceptance and Use of Technology (UTAUT). The study aims to identify the level of financial technology consumption in mutual fund/ unit trust among investors in Malaysia. The objectives of this research are: 1) to determine the level of awareness on FinTech application in mutual fund/ unit trust investment; 2) to examine the adoption of FinTech in mutual fund/ unit trust investment. The objectives will explore on how FinTech changes the customers in terms of to what extent Malaysians have adopted FinTech so far. The research methodology in an adoption of FinTech service in mutual fund/ unit trust was conducted through questionnaires survey. This study assists participants in financial service management to take advantage of the opportunities offered by FinTech services. Developing the effective and systematic framework is a must for FinTech service especially in mutual fund/ unit trust investment. Implementation of FinTech will provide service improvement and transformation for investment management services in future.

FINRA revises and restructures registration and exam requirements

PurposeTo explain a new set of rules, detailed in FINRA Regulatory Notice 17-30, proposed by the Financial Industry Regulatory Authority (FINRA) and approved by the US Securities and Exchange Commission (SEC), that revise and streamline the number and types of proficiency exams broker-dealer personnel must take in order to become registered, as well as the categories of registration.Design/methodology/approachDiscusses the background, including FINRA’s consolidation of National Association of Securities Dealers (NASD) rules; the new registration regime; conditions for waivers; criteria for “permissive” registration; firms’ requirement to designate “Principal Financial Officers” and “Principal Operations Officers”; new categories of principal registration; FINRA’s elimination of certain registration categories; research analyst, research principal and supervisory analyst exam requirements; the ability of a registered representative to function as a principal for a limited period; the prohibition of unregistered persons to accept orders from customers; and the Securities Industry Essentials (SIE) Examination Content Outline.FindingsThe new structure is intended to bring greater consistency and uniformity to the qualification process. Among other changes, it eliminates several registration categories that either have become outdated or have limited utility, permits persons not yet associated with a broker-dealer or employed in the securities industry to take a preliminary registration exam prior to entering the securities industry, and makes other changes intended to modernize the registration and examination regime for broker-dealer personnel.Originality/valuePractical guidance from lawyers with broad stock brokerage, investment management and related financial services experience.

Investing in Sports Stocks: A Case of Sportfolio Management Inc.

Jordan Bourne is the Chief Executive Officer (CEO) of Sportfolio Management Inc. (SMI), a small hedge fund operating out of Boston, Mass. SMI provides prudent and profitable investment management services to clients through active investment in publicly traded companies operating in sport-related business endeavors. By employing both “long” and “short” investment management strategies, Bourne’s objective is to achieve a positive rate of return in the Sportfolio for her valued clients. Assistance from the firm’s Investment Analysts is vital to meet this objective.

Fiduciary duties of UK investment managers and conflicts: the arch financial products case

Purpose – The article analyses the findings of the Court in the Arch Cru case relating to manager fiduciary duties under English law and conflicts of interest compliance failings. Design/methodology/approach – This article summarises the Arch Cru case with a focus on fiduciary duties and practical compliance suggestions for conflicts of interest situations. Findings – The article addresses in particular the novelty of the fiduciary duty finding in the Arch Cru case and the justifiable concerns that compliance officers may have going forward given the nature of the regulatory enforcement approach taken by the FCA. Practical implications – The article highlights the nature of the fiduciary obligations owed by managers under English law together with a brief analysis of the causes of action for breach of fiduciary duty and the linkage to regulatory compliance obligations. Originality/value – The article is of value to investment managers, their compliance officers and general counsel where the manager provides investment management services under English law because it provides insight into the nature of investment manager fiduciary duties under English law and the impact of breaching those duties in a conflicts of interest scenario.

The Law of Private Investment Funds

1. Introduction to Private Investment Funds 2. Marketing Private Investment Funds 3. Taxation of Private Investment Funds 4. The Legal Duties Arising from the Provision of Investment Advisory and Management Services 5. The Regulatory Duties Arising from the Provision of Investment Advisory and Management Services 6. Governance Issues in Partnerships Used as Private Investment Funds 7. Governance Issues in Offshore Companies Used as Private Investment Funds 8. Invester Protection Failures in Private Investment Funds 9. Recent US and EU Regulatory Responses 10. Self-Regulation and Private Actors 11. Side Letters as a Means of Mitigating the Governance Challenge 12. Board of Directors Composition as a Means of Mitigating the Governance Challenge 13. Listings of Private Investment Funds as a Means of Mitigating the Governance Challenge 14. Evaluating and Implementing Private Monitoring Solutions