Aberdeen Standard Investments launches AI fund
Written by Peter Walker
Aberdeen Standard Investments has launched a new fund that utilises machine learning to identify sources of potential returns.
The Aberdeen Global Artificial Intelligence Global Equity fund is the product of a collaboration between Aberdeen Standard Investments’ Quantitative Investment Strategies (QIS) team and the Mitsubishi UFJ Trust Investment Technology Institute in Tokyo, Japan – a centre of excellence in robotics, artificial intelligence (AI) and financial technology.
The fund embeds machine learning techniques within the investment process and will use a variety of quantitative techniques to time its investments. These investments will be based on ‘factor premia’ – those sources of risk such as value, quality, momentum, small size and low volatility that can provide investors with persistent risk-adjusted excess returns.
Standard Life Aberdeen co-chief executive Martin Gilbert said that for active investment management firms, the ability to use machines to read and understand vast amounts of data to forecast market moves more accurately has spawned innovation and a resurgence in active quantitative investment approaches.
“To benefit from this AI-driven innovation, and to complement our active fundamental strategies, we are proud to have collaborated with the MTEC - Japan’s leading financial technology think-tank - and the Trust Bank to develop this active quant fund,” he stated.
MTEC president Junichi Narikawa explained this is the first time in the organisation’s 30-year history where it has collaborated with an entity in Europe.
“We have worked with their Quantitative Investment Strategies team in London and Edinburgh over a two-year period, and developed a number of innovative AI-models to identify and capitalise upon patterns in global equity markets in order to dynamically time factor premia to generate alpha.”
David Wickham, global head of the Quantitative Solutions team, said that recent innovations in AI, combined with rapid advances in computational power, have enabled the creation of this fund.
“At present, most AI products are either thematically focused, investing in well-known and relatively expensive AI-related companies – or ‘big data’ focused where investment managers attempt to extract alpha from unstructured data sources using machine learning techniques,” he commented.
The fund's asset management charge amounts to 0.50 per cent per annum for institutional investors and 1 per cent per annum for retail investors.