Man versus machine is a debate at the forefront of the asset management industry.
Whether it’s the popularity of passive investments or the interest in AI, it’s clearly a trend that is here to stay, according to Wadhwani AM’s CEO, Sushil Wadhwani.
‘There is a continuing interest in ‘machine', for example, quant/AI/Machine Learning and how it can be beneficial,’ he told Citywire Selector.
‘I’ve certainly met a lot of people who have just invested in ‘man’, but now they want ‘man’ to partner with ‘machine’, I think the ‘man-machine’ partnership trend could be extended in the next 10-15 years.
‘We have always been a man/machine partnership, where we have tended to exercise the machine. But obviously, it’s a partnership because it is real people that do the research and implement things we actually believe in.’
Bring in the quants
This is far from the view of an executive panel of CEO’s who earlier in the year clashed over what the future of AI holds for active investors.
Wadhwani said investors need to remember that, more often than not, there is a human mind behind any algorithm.
‘We don’t just let the machine do everything, we have frameworks to determine what makes sense in terms of what the machine is doing.
‘As I talk to friends in the City and on Wall Street, a lot more ‘pure man’ organisations are bringing in machines quite intensively.’
Asset managers have followed suit. Man Group’s quant arm, Man AHL, counts computer equipment as one of its biggest expenditures, along with the hiring of engineers to keep up with tech change and growth.
Two years ago, the group also hired a computer scientist to really expose the group to the world of AI.
‘They are all hiring data and computer scientists and so on,’ Wadhwani said. ‘I see this trend extending consistently, I think it will yield a lot of opportunities in terms of data because more and better data will become available to us.
'As the industry becomes more interested there will be more providers producing data which will be a good thing. It will give us more competition which is both a good and a bad thing.
'But we are clearly aware that we have to keep innovating and keep doing research, it’s an intellectual challenge,’ he added.