Rethinking Asset Management with AI

In an era where digital transformation touches virtually every industry, finance and asset management are no exceptions. The traditional methodologies of managing assets, heavily dependent on human judgment, are undergoing a significant transformation, due to the contribution of Artificial Intelligence. In this article, we will explore how Artificial Intelligence is reshaping the asset management landscape.

The asset management industry has always been data centric. Analyzing data is essential to devising good investment strategies and efficiently managing the investment portfolio. Nevertheless, the volume, variety, and velocity of data have surged considerably.

It is exactly in this landscape that Artificial Intelligence comes into play. AI systems, equipped with advanced machine learning models, can quickly analyze vast amounts of data, from traditional data sources (e.g. historical price data) to non-traditional data sources like social media sentiment. This allows asset managers to extract nuanced insights, often revealing hidden patterns or trends that would be impossible for humans to identify.

Deep Learning models have been developed, that can successfully predict and forecast market movements by analyzing historical data. Asset Managers can leverage these models to design better investment strategies and obtain higher returns.

But Artificial Intelligence will disrupt also Risk Management. Machine Learning models can be used to identify and predict anomalies and potential areas of concern, by monitoring market conditions, global events, and internal organizational data, allowing firms to save billions of dollars and preserve their reputation.

Behind the scenes, Artificial Intelligence is helping streamline operations and reducing costs. Tasks like data reconciliation, trade matching, and even customer service inquiries are now being managed more efficiently through AI systems: an example of fruitful integration between Artificial and Human Intelligence.

The adoption of AI in Asset Management is interesting, and many innovations are coming into play. The Asset Manager needs to be aware of the latest developments in this field, to be able to make informed decisions and use AI effectively. At the same time, one must be aware of the risks that AI brings, particularly about data privacy and regulatory constraints.

This is essential for Asset Managers to remain competitive in the current landscape. In a world where data is more and more important, the real competitive advantage will be given by the ones that can use better the vast amount of data that surrounds us. Only the most tech-aware Asset Managers will be able to thrive, embracing technology with a proactive mindset.

That’s exactly what we are building at RIV Capital, using Artificial Intelligence to complement human intelligence, to help devise, test and deploy investment strategies, and to dramatically increase the returns for our investors.