Denis Opudo
One of the current emerging trends in the money management industry is the application of powerful computers and artificial intelligence (AI). The technology aids in searching for large data sets and market patterns that can be applied by trading algorithms. This discovery is sourced from the Financial Times article reported on Mach 20th this year. According to this article, the CEO of US asset manager BlackRock Mr. Larry Fink sent home seven underperforming financial managers. The move was in last year where their funds were moved to Systematic Active Equities (SAE). The article indicated that the SAE platform underperformed as compared to all other conventional stock pickers. In less than five years, a blog post estimates that the new global initiative will be launched in South Africa. Mr. Thomas Schlebusch and Michael Jordaan founded NMRQL Research in 2015. The startup was a Stellenbosch-based asset management technology. The two founders served as CEO and director and investor and chairman respectively. The startup has a close partnership with the Sanlam although it is an independent company. NMRQL SCI Balanced Fund was established last year by the NMRQL Research Company. The Fund discovery is a subset of a unit trust fund that makes use of innovative learning machines to conduct market research. However, there are limited uses of IA in financial management in South Africa up to date.
Mr. Schlebusch noted that most models used in South Africa are human based financial management services. In contrary, a most supportive investor from the western countries makes a reference from data obtained from automated financial statements. The challenge with traditional financial managers is measuring performance in relation to metrics such as profits, earnings, debts, and strategic plans. The cause-effect result is the economic situation best described as “crowding in the market”. This situation makes then to be locked in a fundamental-driven philosophy. He added that there are so many data around but require technical skills to convert them into usable form instead. Mr. Stuart Reid who is the NMRQL Research chief engineer and partner emphasized that algorithm fine-tune the parameters into future returns. The individuals finally agreed that the use of algorithms machine learning platform is more desirable in conducting investment analysis.
Mr. Schlebusch further explained that application of algorithms can help to process large quantities of data and improve glean relationships. In addition, NMRQL Research is capable to process items like photos, sentiment as well as monitoring. He responded to the question of how the use of algorithm works out in their company. He said that the time has not yet elapsed to make a judgment. He added that the company has only taken five months since it was launched.
