Artificial intelligence will help generate alpha

Almost all asset managers that use artificial intelligence-based technology in the pre-investment phase say this helps them generate alpha.

A survey by Deloitte Financial Services found that 85 per cent of respondents said using artificial intelligence-based solutions in the pre-investment phase helped them generate returns. For example, using natural language processing and generation can save data collection time and enable analysts to focus on interpreting the data.

In addition, 3/4 (71 per cent) of respondents said they would increase their budget for alpha generation technologies such as artificial intelligence in the next 12-18 months.

Deloitte Financial Services conducted a survey of 400 senior investment management executives on investment management prospects in 2022. The study included investment managers with revenues of at least $500 million and was conducted in July and August 2021.

However, Deloitte warns that increasing technology spending alone does not guarantee success, and that firm leadership is the most important factor in initiating the adoption process of artificial intelligence.

For example, UOB Asset Management uses a sandbox approach to its multi-signal predictive analysis project, which allows users to develop analysis prototypes and analyze data stored in their data lakes and enterprise data warehouse systems.

"in addition, UOB's AI workflow is designed to identify, expand and fine-tune the most efficient use cases, while eliminating use cases that do not meet business needs," the report added. " "some companies, including Vanguard Group and Nuveen, are guiding employees to overcome their fear of failure and promote innovation."