Man Group Bets on AI
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.
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Making the distinction between artificial intelligence and machine learning.
eFinancialCareers reports that low-vol markets favor man over machine.
After successful tests in Europe, the bank expects a fourth quarter rollout.
Firms should first crawl and then walk before they run with AI.