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Alternative Market Briefing

Tarrant: Artificial intelligence will disrupt the hedge fund model

Friday, May 26, 2017

Komfie Manalo, Opalesque Asia:

It had been predicted so often that machines will take over. And now, Protégé Partners founder Jeff Tarrant said he believes as well that artificial intelligence poses a serious threat to equity hedge funds within the next 10 years as machine learning technology becomes more sophisticated, allowing them the ability to predict market movements better than humans, reported the Financial Times.

He was quoted as saying, "Jeff Bezos picked off the bookstore business. Apple totally picked off the music business and Netflix totally changed television. Now [machine learning] is going to pick off the hedge funds." He added that even the "2 and 20" hedge fund fee model, or a 2% cent management fee and 20% performance fee is already obsolete and is open for disruption.

Tarrant said he is launching Mov37, a new business that will invest in startup investment funds that utilize artificial intelligence. He said that Mov37 will initially invest in at least 10 fund managers, either through direct investing or seeding. Tarrant is targeting up to $1bn investments.

Tarrant has also expressed confidence that it is the young and emerging fund managers who will eventually reap the full benefits of machine learning even if some of the biggest and most established hedge funds have already started using computer algorithms in their trading proces......................

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