Discretionary Meets Quantitative Investing in Artificial Intelligence

The advent of artificial intelligence may bridge the gap between the subjectivity of discretionary investing and the rigidity of quantitative investing, according to an article in CFA Institute. Recent developments in machine learning have created exciting possibilities to combine the two investment philosophies,” the article reports. “Now quantitative investors can find much more intricate and non-linear relationships among the fundamental factors that drive investment returns.” On the other hand, it adds, AI will allow discretionary… Read More

Artificial Intelligence and Stocks

Yin Luo, head of quantitative research, economics and portfolio strategy at Wolfe Research, is a longtime champion of artificial intelligence (AI) and its potential to transform investing, according to a recent interview with Barron’s. While Luo but doesn’t think that robots will replace money managers soon, he does believe that machine learning can give investors an edge. Here are some highlights of the interview: Machines investing on their own, says Luo, is a outlandish concept.… Read More

Howard Marks: Computers Won’t Replace the Best Investors

In his recent memo entitled, “Investing Without People” Oaktree co-founder Howard Marks argues that passive and quantitative investing will all help keep markets efficient and reduce costs for investors. This according to an article in The Wall Street Journal. But while active managers have underperformed their benchmarks for years while charging high fees to investors, Marks doesn’t think the strategy is “dead,” adding, “I doubt computers can do what the very best investors do.” The… Read More

Some Thoughts on Howard Marks’ Most Recent Memo

By Jack Forehand (@practicalquant) —   Howard Marks’ memos provide some of the deepest and most thought provoking insights in the investing world today. They are on par with Warren Buffett’s annual letters as one of the few must reads in investing today. Marks just recently posted a new memo, and the topics he covered were very close to home for me as someone who believes in quantitative and factor-based investment strategies.  The memo was titled Investing… Read More

Artificial Intelligence is About to Hit Your Portfolio

“Ask almost any money manager what they’re most interested in these days and it’s not proselytizing new investing styles—it’s artificial intelligence,” says a recent Barron’s article. “Artificial intelligence is the ultimate competitive edge.” The article quotes Andrew Lo, MIT’s director of the Laboratory for Financial Engineering, who says, “We are in a technological arms race. Financial institutions have to participate just to keep up with the competition” for cost savings, among other things. Delving into… Read More

BlackRock’s New Suite of Funds to be Led by Robots

Blackrock Inc., the world’s largest asset manager, is “turning to robots to drive its latest push into active exchange-traded funds,” according to a recent article in Bloomberg. The article reports that, according to a recent statement by the firm, the funds (under the brand “iShares Evolved”) will choose holdings in industries such as technology, innovative health care and media entertainment based on machine learning and natural language processing. According to Jeff Shen, co-head of investments… Read More

Morningstar Incorporates Artificial Intelligence into New Ratings

Earlier this month, Morningstar introduced new quantitative ratings that will cover more than 10,000 funds and ETFs. The system will use both machine learning and artificial intelligence to “learn from the rating produced by Morningstar’s analysts.” This according to an article in InvestmentNews. “Essentially,” the article reports, “the program will adjust its ratings to learn from mistakes—and incorporate improvements—made by its human counterparts.” The development stems in part from the increased workload experienced by the… Read More

Why Artificial Intelligence Won’t Fundamentally Change Investing

By Jack Forehand (@practicalquant) —  Artificial Intelligence is going to change the world. It already has in many ways. But its best days are still ahead of it. So many industries, ranging from technology to healthcare to manufacturing, will experience huge benefits from its vast potential. Investing is one of the areas AI might have the most impact. There are a myriad of uses for AI in investing, and almost all of them will be big… Read More

The Invasion of Artificial Intelligence

“If computing power and data generation keep growing at the current rate,” says Luke Ellis of UK based Man Group Plc, “then machine learning could be involved in 99 percent of investment management in 25 years.” This according to an article in Bloomberg. Some major money managers are on the AI bandwagon, the article reports, citing Two Sigma and Goldman Sachs Group as firms that have adopted AI as a “cornerstone strategy or research tool.”… Read More

Artificial Intelligence Moving into Mutual Funds

 Artificial intelligence, which has been used by institutional investors for some time, is now making its way to individual investors as well. This according to a recent article in The Wall Street Journal. The article cites two new products that were launched in October and that use AI: AI Powered Equity ETF (AIEQ) and Credit Suisse RavenPack Artificial Intelligence Sentiment (AIS) Index. AIEQ, the article says, is the first ETF supported by IBM’s Watson cognitive… Read More