Man Group Bets on AI09.27.2017
Bloomberg reports that several years ago, Man Group was producing impressive returns with artificial intelligence in a test environment, but the $96 billion hedge-fund group couldn’t apply it to real-money portfolios because technologists couldn’t quite explain why AI was executing the trades it was executing.
Man released its AI system from quarantine in 2014, and the alpha rolled in, attracting additional assets along the way. By 2015, Bloomberg reported, artificial intelligence was contributing half the profits in one of Man’s biggest funds, the AHL Dimension Programme, even though AI had control over only a small proportion of overall assets.
Elsewhere in the company—and in the industry as a whole—AI technology is being used to find the speediest way to execute trades, to make bets on market momentum, and to scan press releases and financial reports for keywords that could signal that a stock will rise or fall. Even Man’s very human discretionary division, where business is centered on experienced asset managers, is exploring AI techniques, Bloomberg reported.
Big clients took a little time to warm up to AI, but they have since rushed to join Man’s algorithm-centric funds. Assets under management at Man have surged about 77 percent since the beginning of 2014, while AHL Dimension fund assets have more than quintupled since then.
Man has moved from viewing AI with skepticism to making it a cornerstone strategy. Among the company’s biggest expenditures now is computer equipment and hiring engineers.
AI can optimize algorithms to better recognize and adapt to real-time market conditions.
Alliance will enable joint customers to gain more valuable and actionable insights.
Technology has enhanced capabilities of surveilling larger and more disparate data sets.
With Eugene Kanevsky, James Redbourn, and Joanna Wong, CLSA
AI/ML on the buy-side trading desk is a long-term program with short- and mid-term deliverables.