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Machine Learning & Hedge Funds

How AI and Hedge Funds are merging for improved results


AI and Hedge Funds

More data can be generated in a single day with AI than the entire 1990’s combined!

With the power of these systems, problems that would previously have taken weeks to solve, can now be done in mere hours.

The use of AI is spreading across; investment managers from pure AI driven specialists to large quant driven shops to traditional fundamental investors as they all strive for that “edge”.


Falling costs have triggered the wave

Until recently, uptake has been limited. However, with costs falling for this technology the industry has taken note and even the largest firms are beginning to experiment.

Bridgewater Associates and Man Group are both developing strategies to implement this technology. Renaissance Technologies and Two Sigma are some firms already using AI and even JP Morgan Asset Management arm are planning to invest in machine learning hedge funds.


What about performance?

The Eurekahedge AI hedge fund index slightly outperformed the Eurekahedge hedge fund index in 2017 and 2018.

It’s also key to remember that the technology is still in its early days of development and will improve significantly the more it gets used and tested.



Gaining The Edge Conference

AlternativeSoft attended the recent “Gaining the edge” conference in New York at the beginning of November, where machine learning and AI were spoke about at length.

Here are some quotes from some of the panellists from the event;

“AI and machine learning is going to raise the bar across everything. Those that are not paying attention to it now will fall behind.” “Every manager has to be looking at it.” “The technology is something that is very real but at the same time, it is not a strategy by itself.”

In September 2018, Barclays Hedge conducted a poll which showed 56% of hedge fund respondents had used AI or machine learning to inform their investment decisions.

With 2020 fast approaching, are hedge funds ready to let the machines take over?

AlternativeSoft is an award-winning quantitative analytics software specialising in asset selection, portfolio construction and customised reporting. To find out more or register for a free demo, get in touch with our team.


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