Artificial Intelligence Analyst and Individual Investor Activities : Empirical Evidence from Mutual Fund Investment

Many retail investment platforms have introduced artificial intelligence (AI) analysts to help individual investors gather insights and evaluate investment products. Yet, there is scant empirical effort examining the business impact of such an AI tool on individual investors' financial market investments. To fill this gap, we collaborate with Ant Fortune (an affiliate of Alibaba) , the largest retail investment platform in China, and explore a unique dataset wherein an AI analyst was introduced to facilitate individual investors’ investment activity. Our analyses provide the first empirical evidence showing that individual investors who use the AI analyst perform more manual investment sessions and invest more than those who do not use the AI tool. Interestingly, our further analyses document both positive and negative effects across heterogeneous investor groups. Specifically, we demonstrate that, on the one hand, the use of an AI analyst could drive more investment activity from individual investors who lack adequate financial knowledge, indicating a positive financial inclusion effect. On the other hand, we find that AI analyst use reduces investment activity from investors who are less familiar with financial technology, suggesting a negative resistance effect of AI applications. More importantly, using an AI analyst alters investors’ risk tolerance, increasing their investment in products carrying increased volatility. Despite the positive effects of using AI analysts for investment returns, information overload causes moderate negative impact for investors with less finance knowledge. Our results help platform managers understand whether and how they should implement AI analysts to promote individual investors’ standing in financial markets