Hosted by Denis Rezendes, CFA and Brendan Ryan, CFA
Watch the video below, Demystifying AI in Asset Management and its Use in the Investment Process, hosted by Denis Rezendes and Brendan Ryan, portfolio managers of BCM’s AI-driven Decathlon strategies.
- Insights into the application of AI in investment management—because financial markets are not a “solvable” problem, using AI to make investment decisions is more complex than other everyday applications.
- What to look for in an AI based investment manager—cautioning against overly simplistic approaches and encouraging skepticism toward strategies promising consistent alpha, Denis and Brendan emphasize the need for adaptive, robust, and diversified models in navigating the dynamic, ever evolving markets.
- Intricacies of how BCM’s AI-based models are constructed—BCM employs 54 varied investment frameworks that target different goals. Denis and Brendan illustrate the concept of algorithmic committees and ensembles and combining multiple frameworks to enhance robustness. The goal is to create diversified portfolios that work consistently over time, despite the inherent difficulty in predicting market movements, ultimately seeking to mitigate risk and provide more consistent outcomes.
Disclosures:
Beaumont Capital Management, LLC is registered with the Securities and Exchange Commission (SEC). Registration does not imply any specific skill or training and does not constitute an endorsement of the firm by the commission.
This material is provided for informational purposes only and does not in any sense constitute a solicitation or offer for the purchase or sale of securities nor does it constitute investment advice for any person or a recommendation to take any action. Investment themes and individual securities mentioned may or may not be held in any or all client accounts. The views expressed are subject to change based on the market and other conditions. The information presented in this report is based on data obtained from third party sources. Although it is believed to be accurate, no representation or warranty is made as to its accuracy or completeness.
The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities, investments or strategies is for illustrative purposes only and is not intended as investment advice nor are they a recommendation to take any action. Past performance is no guarantee of future results.
Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.
As with all investments, there are associated inherent risks including loss of principal. Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Sector and factor investments concentrate in a particular industry, and the investments’ performance could depend heavily on the performance of that industry and be more volatile than the performance of less concentrated investment options and the market as a whole. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. The risks are particularly significant for ETFs that focus on a single country or region. The ETF may have additional volatility because it may be comprised significantly of assets in securities of a small number of individual issuers. Securities of companies with smaller market capitalizations tend to be more volatile and less liquid than larger company stocks. Smaller companies may have no or relatively short operating histories or be newly public companies. Some of these companies have aggressive capital structures, including high debt levels, or are involved in rapidly growing or changing industries and/or new technologies, which pose additional risks. Fixed income investments are subject to inflationary, credit, market and interest rate risks.
As market conditions fluctuate, the investment return and principal value of any investment will change. Diversification does not ensure a profit or guarantee against a loss. There are risks involved with investing, including loss of principal. Before investing in any investment portfolio, the client and the financial professional should carefully consider client investment objectives, time horizon, risk tolerance, and fees.
The Decathlon strategies utilize artificial intelligence (AI) in the decision-making process, introducing inherent risks. The AI’s lack of predictability, reliance on historical data, and sensitivity to market volatility may impact investment outcomes. Technology-related risks and the dynamic nature of market conditions further contribute to potential uncertainties. Ongoing monitoring and adjustments to the AI model are essential. Investors should recognize the limitations of AI, seek professional advice, and carefully assess their risk tolerance and financial situation before making investment decisions.
There is no guarantee that the investment objectives will be achieved.
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