|
Laurent Favre By Opalesque Geneva for New Managers: Things are changing at AlternativeSoft, the London-based platform that has since 2005 provided portfolio construction and fund selection solutions. This is thanks to their new partner, namely the ever-more omnipresent entity that is Artificial Intelligence (AI).
This partner is much needed: with more than 500 private equity funds, 800 hedge funds and 300,000 mutual funds to screen, analyse and present, technical help of the higher kind is more than welcome.
The firm is not alone in its adoption of AI. According to AI Magazine, 75% of financial firms now use AI, a rapid increase from 58% in 2022. Furthermore, the global fintech market, heavily influenced by AI, is projected to generate US$1.5tn in annual revenue by 2030.
In the ever more digital financial sector and its growing amount of data, AI can help streamline financial processes and enhance business partnerships by surfacing and presenting relevant information. It can help calculate risk, forecast future conditions and optimize financial analyses, planning and organization, reports IBM.
Capital raise
AlternativeSoft's latest feature, produced with the help of AI, is a capital raising platform, which aims to lessen the plight of small and medium cap hedge funds that usually struggle to raise capital and of allocators who find it hard to find the right funds. The new feature can help both parties, says Laurent Favre, CEO and founder of AlternativeSoft, during a recent Opalesque TV interview with Opalesque founder Matthias Knab.
"AlternativeSoft has three modules in our large software," Favre explains. "The first module is statistics for funds, mutual funds, hedge funds and private funds. The second module is due diligence on hedge funds using artificial intelligence. The third module is the hedge fund marketplace for small and medium hedge funds (Capital Raise) where these funds are exposed in front of 150 institutional clients which are, for example, Alliance-Berstein, Kedge Capital, Franklin Templeton, Qatar and Kuwait."
How it works
All managers have to do is upload their fact sheet, which is read by AI. The program then analyses the data, the documents, raises red flags if necessary, computes compliance, and performs due diligence. All the results are posted on the cloud via a webpage for each fund.
"The hedge fund marketplace, it's like Amazon," Favre says. "The (manager adds) his hedge fund on a webpage and then the allocator or the large investor looks at the webpage where the fund has been analysed either by statistics or by artificial intelligence."
What differs the platform from other research and data providers is this unique fund webpage, to which the manager can add material. The other difference is that it is free to go on that database, offering an obvious advantage to new entrants.
For hedge funds that have up to $200m in AuM, raising capital is hard. And it is difficult to survive with so little. To top it all, reaching allocators at this juncture is "extremely difficult." This platform aims to help solve those pain points.
Bridging the gap between allocators who are overwhelmed with the sheer amount of small funds coming to them and managers who cannot reach them can be eased with a clear and updated webpage and a tool for screening. Allocators can just press the button "contact hedge fund manager" when their search has landed them in the perfect spot.
Outlook
Currently, capital raising is done through relationships, he notes. "However, my vision is that in the future it will be fully automated where AI will rate the statistics and will rate the qualitative due diligence."
He also sees due diligence and operational due diligence being conducted by AI, reducing the work of analysts by 80%.
His platform cannot - yet - autonomously show allocators fund that they might like. This may come later.
Over the next five years, Favre sees AI avatars selling the funds on behalf of the managers. And allocators will be able to subscribe with a simple mouse click.
The program aims to offer hedge funds more visibility. It may also open the door to a new selling model.
You can watch the whole video interview here:
|
RSS
