An examination of the trends and use cases of AI and big data technologies in investments

AI Pioneers in Investment Management

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In this report, we seek to identify high-impact applications of artificial intelligence (AI) and big data in investments and best practice in their implementation by examining specific use cases. For this purpose, we conducted interviews with investment industry practitioners around the world and from different areas of investments, mostly in April and May 2019.

We found that relatively few investment professionals are currently exploiting AI and big data applications in their investment processes. To provide a guidepost for investment firms and individuals seeking to move toward the latest technological frontier, we spoke with a selection of institutions across the globe that are currently using these technologies; these are among the AI pioneers in investment management.

Their use cases are illuminating. Among other things, they underscore the opportunities but also the limitations of AI and the continued important role of human judgment in investment processes.

We ascribe to the power of the “AI + HI” model: AI techniques can augment human intelligence to enable investment professionals to reach a higher level of performance, freeing them from routine tasks and enabling smarter decision making that leverages the collective intelligence of machines and humans.

Successful investment firms of the future will be those that strategically plan on incorporating AI and big data techniques into their investment processes.Successful investment professionals will be those who can understand and best exploit the opportunities brought about by these new technologies.

The future is here. 

About the Author(s)

Larry Cao
Larry Cao CFA

Larry Cao, CFA, senior director of industry research, CFA Institute, conducts original research with a focus on the investment industry trends and investment expertise. His current research interests include multi-asset strategies and FinTech (including AI, big data, and blockchain). He has led the development of such popular publications as FinTech 2017: China, Asia and Beyond, FinTech 2018: The Asia Pacific Edition, and Multi-Asset Strategies: The Future of Investment Management, and is a frequent speaker at industry conferences on these topics. During his time in Boston, pursuing graduate studies at Harvard and as a visiting scholar at MIT, he also co-authored a research paper with Nobel laureate Franco Modigliani that was published in the Journal of Economic Literature by American Economic Association. Larry has more than 20 years of experience in the investment industry. Prior to joining CFA Institute, Larry worked at HSBC as senior manager for the Asia Pacific region. He started his career at the People’s Bank of China as a USD fixed-income portfolio manager. He also worked for US asset managers Munder Capital Management, managing US and international equity portfolios, and Morningstar/Ibbotson Associates, managing multi-asset investment programs for a global financial institution clientele. Larry has been interviewed by a wide range of business media, such as Bloomberg, CNN, the Financial Times, South China Morning Post and the Wall Street Journal.

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