Fund Operator: How much adoption do you see across the industry for Artificial Intelligence (AI) in institutional asset management?

John Utter: AI is gaining in prominence. It is not yet universal, but it is becoming more and more common.

We see an enormous opportunity for AI in marketing, for example, with predictive analytics, something already in use with many asset managers. Predictive analytics allows a marketer to analyze and customize according to client preferences and behavior.

"We see an enormous opportunity for AI in marketing"

Down the road, commentary and RFP departments will be supported by AI. Websites will also be enhanced, as AI permits firms to customize the user experience.

FO: Why does the industry see this as an important element to integrate into the asset management ecosystem?

John: On the investing side, AI can help firms save a lot of time. Instead of looking blindly for a needle in the haystack of unstructured data, AI can help make sense of it.

AI is gaining in prominence because alpha is harder to find. AI may improve fundamental analysis but it also, potentially, contains costs.

"Instead of looking blindly for a needle in the haystack of unstructured data AI can help make sense of it"

AI also allows firms to deepen the connection to clients, prospects, and consultants. It will reframe the relationship between marketing, distribution, client service, and consultant relations, making marketing more of a partner to the other functions. As such, the growth of AI requires a rethink of how a marketing team is built.

FO: What types of predictive analytics do you see institutional asset managers attaining through the use of AI, and how can the data be utilized?

John: We’re starting to see AI being applied to foot traffic data, for instance. What can that data tell us about store revenues?

In general, the aggregation and analysis of unstructured data permits new analytic inputs to come to the fore. As AI develops, it should permit analysts to improve the mosaic of information about the companies they cover.

In terms of marketing, AI permits customization of thought leadership preferences. This will allow for better outreach to clients, prospects, and consultants, as forms of contact are optimized to align with recipient preferences.

FO: How can this technology aid portfolio managers in their investment functions?

John: AI allows firms to analyze unstructured data and incorporate the results of that analysis into investment decisions. Such analysis of unstructured data permits analysts to get an edge over analysts relying purely on fundamental inputs.

FO: From a technology standpoint, where do you see the industry headed?

John: We are starting to see the rise of “quantamental” approaches to investing, with quants being integrated into fundamental investing. This is increasingly looking like the norm of the future.

Fundamental investing won’t disappear, but the fundamental shop that refrains from using AI will eventually become rarer.

"We are starting to see the rise of “quantamental” approaches to investing"

The industry is being transformed through technology, and the partnership that exists between asset managers and their clients, prospects, and consultants is being made richer thereby.

Our workforce is becoming more adept at using this technology, which will enable us to deepen that partnership.

This article is taken from the research report Fund Technology, Data and Operations, US 2019. To download the full report click here.

 

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