Artificial Intelligence Provokes Shift in Asset-Allocation Strategies

Artificial intelligence affords investment specialists the ability to make autonomous assessment of market conditions, removed from the frailties of human decision making, argues a new white paper by Plotinus Asset Management. That capability, in turn, means that institutional investors are set to inject fresh strategies into their longstanding techniques.

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The white paper is authored by CJ Finnegan, a pioneer in deploying artificial intelligence as a complement to passive investment strategies. Through a Cayman-based fund for qualified investors, his firm takes advantage of advanced technology on a real-time basis for those looking to outperform a broad index of US stocks.

Informational Dissonance and Artificial Intelligence: Using AI to Harness a Metric of Contemporary Society fuses headline news-flow to the asset-management industry. Finnegan argues, "Over the past year, both the pandemic and the US presidential election have created dissonance between perceived public newsworthiness and actual public interest. Multi-dimensional analysis of the associated trading patterns enables us to exploit this gap for the benefit of investors."

Finnegan continues, "With portfolio managers desperately searching for yield, AI can be used to create truly innovative investment strategies, potentially achieving sustained outperformance. Traditionally, the industry has simply used technology to better financial engineer what someone else has already done. We now have a new playing field."

Finnegan asserts that the fundamental challenges in the US economy offer an ideal framework to deploy these investment strategies. "At our firm, we find solace in the rigor afforded by intensive use of artificial intelligence. Too many professionals are focused on the euphoria of market gyrations."

"The sort of elaborate sentiment analysis we have seen is a bit like a cat chasing its own tail. On the surface, this may appear to validate the role of passive investing. The real edge in this setting, though, is the ability to use AI to cut through extreme patterns because of its yield-generating capability," emphasizes Finnegan.

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ABOUT PLOTINUS

Plotinus Asset Management is regulated by the Cayman Islands Monetary Authority. Its suite of AI-based products is designed primarily for institutional investors who are eligible to invest in offshore funds. The firm is registered with the US CFTC and is a member the US National Futures Association.

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SOURCE: Plotinus Asset Management