Machine Learning, driven by the rise of big data and evolving technologies, is emerging as a powerful quantitative investment tool, with financial advisers increasingly recognising the benefits it can bring to investors, according to Man AHL.
A recent survey of financial advisers, who attended a series of adviser events held by Man AHL across Australia earlier this month, found that nearly three quarters of advisers (74%) believe Machine Learning, a branch of artificial intelligence, has the potential to change the way we invest in the future.
Speaking at the adviser events, Man AHL’s Oxford-based Chief Scientist Dr. Anthony Ledford said that Machine Learning has become increasingly important to the alternative investment management industry as it deals with larger and more complex data-sets.
“The rise of Machine Learning in quantitative investing is powered by three separate revolutions: the growth in computing power, the explosion of data generation and the maturing of methodologies from statistics, computer science, mathematics and engineering, amongst other disciplines.”
“As more data become available, sophisticated Machine Learning models enable new patterns to be detected that humans can’t easily spot. The technology is a significant area of research focus for Man AHL and we believe our enhanced focus on Machine Learning will be strongly supportive of the evolution of our quantitative investment strategies,” Dr. Ledford said.
Man AHL has been actively researching Machine Learning techniques for several years, including through its unique collaboration with the University of Oxford – the Oxford-Man Institute. Man AHL has also successfully applied Machine Learning models within its client trading programs.
Allocation to alternatives expected to grow
The survey1 also demonstrated that financial adviser sentiment towards alternatives such as hedge funds, managed futures and alternative beta remains positive, with 45% of financial advisers planning to increase
their allocations to alternatives in the next 12 months and the remaining 55% planning to retain the same allocation.
Low correlation to equity markets was seen by financial advisers as a key benefit of alternative investments for clients (44%), followed by downside protection potential (31%) and the ability to outperform (23%).
