'Artificial intelligence is a game-changer for asset management.
The financial world is fully engaged in exploring the potential of artificial intelligence (AI). And it’s not just about investing in AI stocks, but also about managing investment portfolios using AI.
Artificial intelligence allows asset managers to focus on their true value-add for investors.
Jürgen Verschaeve, Chief investment officer at KBC Asset Management
'AI is pushing the boundaries of quantitative investing. 'The essence of investing remains unchanged, but we are seeing endless new opportunities to study unique data and gain new insights,' says Sofie Reyners, Quantitative Investing Expert at KBC Asset Management. Quantitative investing is not new; since as far back as the 1970s, analysts have been looking for ways to make predictions about the future based on numerical data from the past. However, it has always been more of an adjunct to fundamental analysis, in which analysts mainly look for the intrinsic value of an investment.
'Quantitative investing is gaining momentum,' says Reyners. The amount of information available is increasing exponentially, and at the same time, the quality of AI analysis is improving dramatically.
Meanwhile, ChatGPT has shown that AI is even capable of textual analysis. 'AI can be used to analyse the speeches of CEOs and finance directors to determine how optimistic or pessimistic they are. 'That wasn’t an option five years ago, but it can be a very enriching addition to complement other analyses,' says Jürgen Verschaeve, Chief Investment Officer at KBC Asset Management.
Quantitative investing is gaining momentum. The amount of information available is increasing exponentially, and at the same time, the quality of AI analysis is improving dramatically.
Sofie Reyners, Quantitative Investing Expert at KBC Asset Management
Trendwatcher
AI enables asset managers to greatly improve their efficiency. Analysts spend a lot of time on data analysis to determine whether specific stocks are worth buying. Using AI saves these analysts a lot of time. 'That’s actually a necessity, too, given the huge amounts of information being generated by digitalisation. There is so much data that we are no longer able to process it efficiently using traditional methods. Quantitative models enriched with AI have incredible data processing potential. 'They make decisions at high speed based on real-time insights,' says Reyners.
This is also changing the role of analysts. 'Most AI models look for relationships in past data. But formulating a vision of the future is something only humans can do. Analysts are evolving more into trend watchers, looking to determine which future developments are relevant for investors. That is the real added value of analysts. AI can play a supporting role, but the real vision will still come from people,' says Verschaeve.
Artificial intelligence can be used to analyse the speeches of CEOs and finance directors to determine how optimistic or pessimistic they are.
Jürgen Verschaeve, Chief investment officer at KBC Asset Management
Implementation
Using AI applications in asset management are not a pipe dream, they are a reality. KBC Asset Management, for instance, has already invested heavily in AI expertise in recent years.
'We started modestly. AI has been running in the background for several years now, and we now feel confident enough to move forward. Today we can say that AI is having a genuine impact on our day-to-day asset management and is a valuable addition for analysts and fund managers,' Reyners says. For the time being, funds that are fully managed by an AI model are mainly something for the early believers in AI technology.
AI is having a genuine impact on our day-to-day asset management and is a valuable addition for analysts and fund managers.
Sofie Reyners, Quantitative Investing Expert at KBC Asset Management
'The role of AI in asset management will only continue to grow,' says Verschaeve. 'But technology will never completely replace humans. AI gives us new possibilities, but humans will always be needed to distil insights from it. Meanwhile, the basic principles of investing remain unchanged. Investment decisions are still evidence-based, prudent and economically judicious, even when innovative technologies such as AI are incorporated into asset management. That will never change.'
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This article is informational only and should not be considered investment advice.
