Australia’s $2.9 trillion superannuation industry should not be afraid of using artificial intelligence or machine learning to help them make better investment decisions.
Speaking at a conference in Sydney, AMP Capital’s Alistair Rew said the benefits that the technology can bring to the investment process are being lost on the sector. FORT Investment Management’s Alan Marantz said investors should embrace machine learning, saying that his firm had already “aggressively” employed the technology to manage risk.
The new technology has “a branding issue,” said Rew, global head of investment technology, public markets at AMP Capital which oversees some $200 billion in assets. “People are scared of it, people are worried about losing their jobs, but we have to be careful about not focusing too much on what the future may look like.”
Rew and Marantz, managing director at FORT Investment Management which is based in New York, spoke at Investment Magazine’s Absolute Returns Conference in Sydney this week.
Rew said the investment industry will be “stunned” by the technological advancements in the sector over the next five to 10 years, adding that the technology behind voice recognition, for example, was “genius.” He said that machine learning should be part of the tool kit in every decision-making process from asset allocation to client management.
The debate “should not be about humans versus technology,” he said. “What we should do is broaden our minds to the potential use of technology. I spend of lot of time working with investment teams and the way that they make their decisions,” he added.
Marantz said FORT, a multi-strategy quant manager, found that allocating risk in a discretionary framework posed “considerable challenges.” He said the founders for FORT were much more comfortable using technology to make the investment decisions, such as asset weighting across markets and geographies or determining the absolute level of risk in a strategy.
“Along each one of those dimensions, we fully relied on machine learning or structured learning to determine the output of that,” he said. “It’s suited us extremely well.”
Marantz said the investment industry in general was the last sector to be heavily impacted by machine learning and AI.
“I think it’s exciting to see what is happening in our industry, but it’s happening in a very uneven way,” he added. “It’s definitely a train that has left the station and will continue to roll and probably roll faster.”
Rew concluded by warning that while the industry needs to embrace the technology, there were short term issues that needed to be addressed such as the quality of industry data, which he described as “rubbish.”
“I want to have the discussion about the future but I still think there is near term issues that I think we need to talk about,” he said.
