Fortunately, AI technology has provided asset managers with sophisticated tools to make smart portfolio decisions that match complicated market conditions.
AI can help asset managers weather stormy markets.
Data and analytics
Due to its benefits, AI technology is popular worldwide. Due to its capacity to create alpha in adverse market situations, providing predictive insights, portfolio optimization, and risk management tools, AI has increased in appeal among asset managers.
AI can swiftly and correctly analyze large datasets. AI can recognize non-linear trends in data, such as fundamentals, technical indicators, and macroeconomics, and apply machine learning algorithms to forecast future returns. Portfolio managers get these projections so they may prepare for market movements.
AI can help asset managers reduce risk and improve quantitative and discretionary choices by recognizing disruption in long-standing patterns and dissonance between market prices and fundamental/macro data early. In unpredictable times, swift, effective decision-making is crucial.
SVB’s fall shows this technology’s potential. Axyon AI’s system has been detecting disruption in long-standing patterns and dissonance between market prices and fundamental/macro data and actively providing interesting alerts to users on the banking sector in the first two months of 2023, including alerts of potential risks, using macroeconomic data and price action.
Automation and market intelligence
AI technology can automate operations and perform sophisticated analyses, enabling portfolio managers to focus on more important duties.
Risk assessments and portfolio rebalancing take time and skill, but AI-powered models can save portfolio managers time and decrease mistakes. During turbulent times, this is crucial.
Government focus
AI’s prediction, efficiency, and other benefits to enterprises are attracting government attention. In March, the UK government released a white paper on how it will regulate AI to foster confidence and stimulate innovation.
UK AI innovation conditions will help advance the technology for corporate usage. This may mean better predictions for asset managers to increase portfolios and reliably handle tumultuous markets.
As the globe realizes the benefits of cutting-edge technology—most recently shown by the US financial disruption but across all market conditions—the technology will only improve.
AI technology may assist asset managers reduce risk, produce alpha, and maximize portfolio potential even during economic uncertainty by analyzing massive datasets fast and correctly, automating activities, and providing market insights.
Asset managers should explore using AI technology into their investing strategy to be competitive and adaptable amid market volatility.
The abrupt collapse of Silicon Valley Bank (SVB) and First Republic Bank and the emergency takeover of Credit Suisse show the continued difficulty for asset managers striving to make solid investments as market volatility continues to harm firms internationally.
