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Laxman Pai, Opalesque Asia: The proportion of systematic hedge funds launched in 2019 that use artificial intelligence/ machine learning (AIML) is over double the proportion in 2016 (23% vs. 10% respectively), said Preqin.
In a tough fundraising environment, AIML can help fund managers to differentiate themselves from competitors and appeal to investors, it said.
The report also claimed that hedge funds using AIML are delivering long-term outperformance. AIML funds have outperformed the wider hedge fund market and other systematically traded hedge funds on a three- and five-year annualized basis.
With mass amounts of data on public equities, bonds, financial statements, currency movements, and even social media all publicly available, AIML can be used by the hedge fund industry in helping managers analyze data and predict market movements.
With AIML developing in capability and delivering returns, more applications of AIML are being seen across the market.
Fund managers use AIML in a variety of ways. Prominent industry veterans such as Two Sigma, Man Group, and D.E. Shaw have for many years included AIML strategies in their offering, implementing AI research methods to provide deeper insight into markets.
As AI applications continue to improve, the number of specialized core AI managers has risen.
Paris-based Walnut Investments and San Francisco-based Numerai are among these specialist managers, with the former utilizing AI to create self-learning...................... To view our full article Click here
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