Artificial intelligence (AI) will have a significant and complementary role to play in asset management going forward, according to investing guru, Man Group’s Pierre Lagrange.
“It’s all about seeing how far we can push the machine in terms of taking some of the decision-making on the investment side. There are so many variables that people are looking at to be aggregated into the decision-making so the more you can use a machine, the better it is,” explained Lagrange, speaking to CNBC on Tuesday.
Lagrange co-founded discretionary asset fund manager GLG in 1995 and stayed with the firm following its 2010 acquisition for $1.6 billion by the world’s largest publicly traded hedge fund, Man Group.
The Belgian financier has recently stepped back from day-to-day portfolio management, partly to oversee the ongoing incorporation of technology into GLG’s investment processes.
Fund managers should firstly identify and then focus their efforts on areas where humans’ skills are more valuable than those of the machine, according to Lagrange. GLG has spent significant time building algorithms to test different investment functions to determine where humans retain an edge.
“If you look at macro or index decision-making you then become more quantitative but when you look at individual companies, the disaggregation makes it more complicated to be purely quantitative so that’s where we want to focus the discretionary input,” clarified Lagrange, pointing to research into single equity or credit names as examples of where humans can add value.
“It’s the same as the industrial revolution where you’re using the machine to enhance your discretionary process,” he added, noting that data mining, polling, modelling and managing momentum were examples of where machines have an advantage.