For many people, buying and selling funds has become simple enough to move a finger, and asset allocation has almost become a fool's operation, but for fund managers who receive redemption instructions, this is another matter, because the pressure that the people had to bear when allocating asset portfolios has not disappeared, but has been transferred to them.
In fact, although these fund managers have superior funds and investment research resources, they "want to wear the crown, they must bear its weight", they need to take into account the income and risk needs of various investors, many trading operations are also exposed to the sun, profit and loss results are not as expected by investors, they are the first to be blamed, the previous popular Internet celebrity fund managers are like this.
In the face of such pressure, the operation of fund managers will inevitably deform, and the result will be a direct impact on investment returns, whether public or private.
There is no doubt that as long as the trading instructions are made by human fund managers, most of the above situations are inevitable, after all, there are still a few masters like Peter Lynch among domestic and foreign fund managers, and it is naturally reasonable to let the computer share part of the work. Among the many institutions that have chosen to let AI intervene in investment management, a private equity fund called "Stop at Best Investing" seems to be one step faster.
Cybertron "fully taken over"?
According to the announcement posted on the public account of Zhishan Investment on June 1, in order to promote long-term development, the company planned to arrange four researchers and an artificial intelligence-based robot "Cybertan" to independently manage five different private equity funds and share the same investment research stock pool with other fund managers. According to He Li's statement in an interview with a brokerage China reporter, the company's previous trading system was called the cyber trading system, and this time the robot was named "Cybertan" in the hope that it would be stable, safe and competitive like a tank.
Interestingly, "Cybertron" has the same name as the home star of the Autobots in "Transformers", although it is impossible to determine whether it is a coincidence, but from the name alone, this robot is indeed quite "science fiction", allowing robots to take over the fund's investment decisions is also very aggressive, because there are few similar examples at home and abroad.
(Source: Stop at the Supreme Investment Official Account, 2023.06.01)
But such an aggressive move did not last long, less than 24 hours later, Zhishan Investment announced on the public account, after discussion and reflection by the team, it was believed that the real significance and value of Cybertron to the company is the reshaping and integration of the existing value investment system in the institution, rather than mainly used for trading, because from the first principle, game trading is not the main source of profit for value investment, let alone the advantage of the team.
The company also pointed out that the aforementioned AI has reshaped and integrated the logical framework, research direction, research method, follow-up method, evaluation system, trading strategy, risk control system, etc. of the company's investment system, so the company will directly use Cybertron for all funds under management to better meet the era of artificial intelligence.
02 AI has a strong advantage
Although the Cybertron takeover of Zhishan's private equity fund is "stillborn", its impact is far from being eliminated, because if trained AI is allowed to fully take over the investment decision-making part of the fund, the probability of human fund managers "losing their jobs" may increase significantly. Of course, many public funders may wonder whether the public fund has similar products, and the answer is yes, and there is more than one.
Taking the three public funds mentioned by CaiLian News in its report on Zhishan Investment - Huaxia Zhisheng Value Growth, Huaxia Zhisheng Pioneer Stocks, and Huaxia CSI 500 Index Smart Selection Enhancement as an example, these three public funds are similar to the private equity products that stop at Zhishan Investment, and they all involve computers in the stock selection process. According to Dongcai Choice, the income and excess returns of these three public funds in the past year are not only much higher than the average of similar products, but also enter the top 10% of all main code equity products.
Not only that, from the common indicators of market performance to measure fund performance - alpha, beta, Sharpe ratio, these three funds are also remarkable, sometimes even far better than the average of similar products.
According to public information, alpha, beta and sharpe ratios are all commonly used indicators to measure the return and risk of funds, of which alpha is used to measure the performance of funds relative to a specific benchmark (in this case, the CSI 300 index), beta is used to measure the volatility of funds relative to the benchmark, and the sharpe ratio is the approximate ratio of the fund's excess return to the risk beared. As the name suggests, the higher the alpha to sharpe ratio, the better, and the beta ratio depends on the situation.
03 Can't promote the model?
It stands to reason that AI can replace manual labor to obtain better investment performance, whether it is public or private, investment institutions should vigorously promote, such as Mingtun Investment and High-Flyer Quant's previously hyped AI applications, of which High-Flyer Quant's actions were once believed by the market that "AI stock speculation is about to land", and this time it is a step further. However, whether High-Flyer Quant was mistaken for AI stock speculation in the early stage, or stopped at this innovative move, some people in the same industry poured cold water.
Some quantitative strategists said in an interview with the China Times that if AI management funds refer to algorithm training quantitative strategies or order strategies, there are actually precedents earlier, but at present, letting AI manage funds, especially funds with subjective strategies, is now more like a gimmick. The strategist believes that some people currently use ChatGPT to analyze stock news for stock selection, which is not very reliable, because AI is not yet strong artificial intelligence, but can only be assisted in a certain aspect. In his view, the current application of AI in the financial field is mainly concerned with how to use large models in the financial field like ChatGPT, so that stock selection strategies or order strategies are more intelligent and have reasoning capabilities.
To sum up, human fund managers do not have to worry about the introduction of AI as an auxiliary tool for fund managers for the time being, because the current AI is not strong enough to "stand alone", and it still needs a long time of exercise and polishing, which is also the only path in the growth of AI. But what is certain is that if these fund managers cannot make their own achievements in the public market, and most of them are replaced by AI, I am afraid it is only a matter of time.
This article is from Securities Star