The inherent capability of AI to extract actionable insights from disarrayed data sources makes it the perfect match for alternative investment practices.
FREMONT, CA: Artificial intelligence (AI) is constantly transforming the business processes across the industry verticals. Financial institutions are also leveraging the technology to gain an edge over their competitors. Increasingly, AI is used for wealth management purposes in hedge funds and more. However, the recent trend indicates a shift of interest of the investors towards alternative modes of investment like private markets.
When it comes to private markets, AI has the potential to make a constructive difference. Scoring an edge in private markets depends on exploiting the asymmetrical data sets. The huge amount of data available in such markets clearly sets the platform for AI to leverage and extract actionable insights pertaining to investments. The above can be achieved by extracting data into a digital and structured form for the AI algorithms to act upon.
It’s essential to bring diverse, complex, and content-rich data sources like emails, scanned documents, and social media content into a readable text via AI functions like automated speech recognition (ASR) and Computer vision. Wealth management firms can also use natural language processing (NLP) technology to understand the context and meaning of the content and generate semantic information.
Firms can also use a two-dimensional scoring framework to find the various areas of private-market investing. One dimension will focus on the development of a model representing complex tasks that do not need human interference, such as data collection. The other dimension will focus on the accessibility and availability of information required for the model.
There are a number of aspects in an alternative investment where AI can play a crucial role. For instance, AI can contribute to funding administration, investment strategy definition, investor reporting, and operations management.
The current trend indicates the growing impetus of alternative investment practices. Further advancements in AI technology will encourage investors to invest in alternative investment areas.