AMC Intelligence – March 2016

  • Artificial Intelligence – AI vs the PM
  • People Moves – December 2015, January and February 2016
  • One Final Thought…

Artificial Intelligence – AI vs the PM

The World Economic Forum at Davos this year was full of talk about AI - Artificial intelligence will spur economic growth and create new wealth. Machines that “think” like humans will help solve huge problems, from curing cancer to climate change. Yet millions of human workers will need to retrain, as robots make their existing jobs redundant.

Inevitably this will, and already has, impacted the world of trading and investing. Our clients are thinking long and hard about ways of harnessing technology to drive the search for alpha and create returns that appear increasingly hard to find in global investment markets. But will human fund managers go the way of the dodo? Perhaps not quite, but the future looks more challenging.

Major advancements in computing power are transforming every facet of modern life, and financial markets are no exception. The investment skills most in demand now are often found in computer scientists rather than economists and investment bankers with MBAs. Whilst this has been the case for a number of years in the “quant” investing world, even larger more diversified asset managers such as Blackrock, Schroders and Fidelity have been building capability to use “quantitative” techniques enabled by modern computing and complex mathematical models. A constant theme with our clients is the search for talent in this space – which more often than not means targeting individuals outside of the investment world – F1 Motor racing Data Analysts, IBM Computer Scientists and so on. .

Advances in “Machine Learning” are of increasing interest in the industry, where some believe a thinking, learning and trading computer will make even today’s superfast, ultra-complex investment algorithms look archaic — and possibly render human fund managers redundant.

A machine learning algorithm is a dynamic programme that scans through large data sets — such as stock prices, weather patterns, earnings call transcripts, Facebook posts or Google searches — seeking themes from the noise. The technique is not new, but more powerful computers mean that it can now be applied to financial markets. But that is not the only advantage of machine learning. When markets undergo “black swan” events and trusted strategies no longer apply, one of the classic challenges for quants is that their models can often prove useless — or worse. Algorithmic trading strategies that are successful one day can blow up the next.

A machine-learning algorithm can evolve and search for new patterns, adjusting to what works in markets that day, week or year. That means asset managers can use them as a tool to enhance their investment process, perhaps by screening for patterns undetectable by humans, or even to develop strategies and trade by itself.

Nonetheless, machine learning has pitfalls.

Even if a model works well in testing it can collapse when confronted by real markets. And lets not forget some of the attributes of being human! A recent FT article on the subject notes that Brad Betts, a former Nasa computer scientist now working at BlackRock’s “scientific active equity” arm, highlighted the 2009 emergency plane landing on the Hudson river by Chesley Sullenberger as an example of when man trumps machine.

We are moving in a certain direction, though. Investment Management is about converting information into data, analysing it rationally, and doing so with some speed. That plays to a machine’s strengths. But clearly, human asset managers will adapt rather than disappear. Most probably, the future of investment management will involve a synthesis of human and artificial intelligence that harnesses the power of both.

People Moves

Investment

Raphael Marechal has moved to Nikko as a Senior Portfolio Manager in Emerging Market Debt. He previously worked at BlackRock, in a similar capacity.

AXA Investment Managers has recruited Michele Patri as Senior Portfolio Manager in AXA IM Framlington Equities’ European Equities team. He joins from AllianceBernstein, where he was a Portfolio Manager/Analyst.

New appointments at BlueBay Asset Management: Jean-Yves Guibert joins as a Senior Credit Analyst from BNP Paribas, where he was a High Yield Sector Specialist and Marc Kemp as Institutional Portfolio Manager. He was latterly a Managing Director – High Yield Debt at JP Morgan.

Anthony Simpson, a former Merrill Lynch Managing Director, has joined JP Morgan Asset Management as European Head of Client Portfolio Management for Multi Asset Solutions. Swantje Boulderstone has also left the Bank of England to become a Portfolio Manager in the Global Fixed Income, Currency & Commodities group at the firm.

Amundi has appointed Heinrich Merz as Chief Investment Officer of Amundi Alternative Investments. He previously worked for Permal, the alternatives manager.

Schroders has hired Stefan Krause as a Portfolio Manager in the Convertible Bonds team. He previously ran the Convertibles Europe fund at Man Group.

Tim Winstone has joined Henderson Global Investors from UBS Global Asset Management, where he was a Director and Senior Fixed Income Manager, while Thomas Hanson has joined from Aerion Fund Management where he ran the sterling investment-grade corporate bond portfolio for the National Grid pension scheme.

Henderson has hired former Co-Head of Baillie Gifford's North American desk, Ian Tabberer, to run two of its Global Equity Strategies alongside Matthew Beesley.

Aberdeen Asset Management has appointed James Hughes as Head of Insurance Solutions. He previously worked for Gottex, where he was Managing Director, Multi Asset Solutions.

Darryl Lucas has moved to Baring Asset Management as a Global Equity Income Investment Manager. He joins from Sarasin & Partners, where he held a similar role.

Aviva Investors has hired John Dewey as Head of Investment Strategy for the Global Investment Solutions team. He joins from BlackRock, where he was a Managing Director in the Multi-Asset Solutions Business.

JP Morgan Asset Management has hired Nick Malangone as an Insurance Portfolio Manager in the Multi-Asset Solutions team. He previously held a similar role at Goldman Sachs Asset Management.

Julie Dickson has moved to Capital Group as an Investment Specialist. She previously worked for Ashmore as Head of Client Portfolio Management, Equities.

AMP Capital has appointed David Allen as Global Head of Equities. He will move in March from Sarasin & Partners, where he was Co-Head of Asset Management.

Anne Richards has been appointed Chief Executive at M&G. She joins from Aberdeen Asset Management, where she had served as CIO.

Christophe Braun has been appointed as an Investment Manager at Capital Group. He joins from CBP Quilvest in Luxembourg, where he was a Portfolio Manager and Investment Adviser.

PIMCO has appointed Lionel Laurant as a Portfolio Manager to focus on distressed credit strategies. He joins from Bayside Capital, where he was a Managing Director and helped to establish the firm’s European platform.

Psigma Investment Management has hired Rory McPherson as Head of Investment Strategy from Russell Investments, where he was a Multi-Asset Portfolio Manager.

Jupiter has announced that Asian income specialist Jason Pidcock has joined the firm as a Fund Manager. He will manage the Jupiter Asian Income Fund, which launched in February. He joins from Newton Investment Management.

JP Morgan Asset Management has appointed Claudius Weissbarth as Executive Director of European Client Strategy in the Global Real Assets team. He moved from BlackRock, where he was a Director, Global Real Estate.

David Nowakowski has joined Baring Asset Management as Director of Research for Fixed Income. He previously worked for Roubini Global Economics, the consultancy, where he was Senior Director of Research.

Mark Whitehead has moved to Martin Currie as Head of Equity Income. He joins from Sarasin and Partners, where he was a Portfolio Manager.

Duncan Shand, previously a Managing Director – Global Market Strategies Group at BlackRock, has joined the advanced-beta team in the multi-asset investments and portfolio solutions group at Schroders.

Global Equity Income veteran, James Harries, has left Newton IM. It is understood that he has opted to join UK-based boutique Troy Asset Management. Nick Clay, who is currently Alternate Manager on the fund and Lead Manager on the Ireland-domiciled BNY Mellon Global Equity Income fund, will replace him.

Jim Snow, a former Senior Portfolio Manager who spent 8 years in BNP Paribas Investment Partners’ multi asset solutions team, has resurfaced at BlackRock in a strategist role.

Distribution

Nikko Asset Management has appointed Udo von Werne as Chief Executive of its operations in EMEA. He joins from Pictet.

Neuberger Berman has hired David Rowe as Head of Marketing for Europe. He joins from Pimco, where he held a similar role.

Royal London Asset Management has hired Phil Reid as Head of Wholesale. He joins from HSBC Global Asset Management, where he was Head of Wholesale and EFT.

JP Morgan Asset Management has hired Paul Farrell as Head of UK Institutional Clients from Dimensional Fund Advisors.

Cohen & Steers has hired Marc Haynes as Head of Institutional Sales and Client Service for EMEA. He joins from Greenwich Associates, the consultancy, where he was a Managing Director.

APG has appointed Gerard van Olphen as Chief Executive. He succeeds Angelien Kemna, the firm’s Chief Finance and Risk Officer who acted as Interim Chief Executive since the departure of Dick Sluimers in 2015. He was previously Chief Executive of Vivate, the Dutch insurance group.

Sharon Power has moved to Old Mutual Global Investors as Head of Client Services. She joins from Wellington, where she was a Director.

Legg Mason has appointed Rick Andrews as Head of International Marketing. He joins from Aviva Investors, where he most recently worked as Consultant overseeing the reorganisation of the group’s Global Business Development function.

RWC has recruited Gary Tuffield to help grow its UK Wholesale business. He joins from BNY Mellon, where he was Co-Head of UK Intermediary Distribution.

AllianceBernstein has announced the appointment of Jamie Hammond as Head of the EMEA Client Group and CEO in London. He joins from Franklin Templeton where he was Managing Director of Europe, heading its Retail and Institutional efforts across the region.

Cofunds has announced the appointment of Marc Bulstrode, as Operations Director. He joins from Fidelity Worldwide Investment, where he most recently worked as Head of Change and Business Management.

HSBC Global Asset Management has hired Adrian Gordon as UK Head of Institutional. He previously held a similar role at BNY Mellon Investment Management and replaces Stuart White, who moves to the role of Head of Strategy.

Amanda Rebello has moved from BlackRock, to Deutsche Asset Management as Head of Passive Distribution for the UK, Ireland and the Channel Islands.

Mike Craston will become Global Head of Business Development at Aviva Investors after moving from Legal & General Investment Management where he was Chief Executive of both the American and Asian businesses.

Hermes has appointed David Stewart as its new Chairman. He is currently a Non-Executive Director at the firm and a Former Chief Executive of Odey Asset Management. He will succeed Paul Spencer.

Niall Quinn has been appointed Global Head of Institutional Business (excluding Japan) at Pictet. He joins from Eaton Vance Management International, where he was Managing Director, with responsibility for all operations outside North America and a focus on Institutional business development.

Stephen Wells has been appointed Director on the Consultant Relations team for AllianceBernstein. He joins from Newton Investment Management, where he was a Senior Institutional Business Development Manager.

Andy Kelly has moved to Kames Capital as Business Development Manager. He joins from Legal & General Investment Management where he was Head of Corporate and Financial Institutions.

Former Investec Head of UK Retail, Charlie Wilson, has joined Pramerica Investments as a Senior Vice President.

Irshaad Ahmad has joined Allianz Global Investors as Head of Institutional for Europe. He joins from AXA Investment Managers where he was Head of UK and Nordics.

PineBridge Investments appoints Gregory A. Ehret as a new permanent CEO in New York. He joins from State Street Global Advisers, where he was President and a member of the Executive Management group, and will take over the senior post from Stephen Fitzgerald, who had operated as interim CEO since 2013.

Derek Brander has been hired by Candriam Investors Group as Head of Wholesale Sales UK. He was previously Director of UK Wholesale at Natixis Global Asset Management.

One Final Thought…

Apparently, there will be a vote later this year about the UK’s future relationship with the EU! A number of publicly quoted fund houses – such as Henderson and Standard Life Investments – have stated that they do not expect Brexit to have a significant impact on their businesses. This confidence stems from the fact that most asset managers believe they will continue to be able to sell Ucits, across the continent in the event of an out vote, in the same way US and Asian fund companies approach Europe at the moment. European investors account for one fifth of the $5.5tn assets in the UK investment industry – more than the entire German Asset Management market.

Some analysts disagree. The FT quotes Guy Sears, the interim Chief Executive of the IA as expressing deep concern over a vote to leave. Analysts at Morgan Stanley have identified firms most “at risk” and Liberum put out a note suggesting a “brave face” being put up by leaders of some London headquartered investment firms.

Lets hope we don’t have to find out who is right.