Tapping into Deeper and Smarter Insights of Intelligent Portfolio...

Tapping into Deeper and Smarter Insights of Intelligent Portfolio Management

By Capital Markets CIO Outlook | Friday, August 30, 2019

To mitigate risks and maximize returns, capital investors are turning towards the latest portfolio managers lead by machine learning algorithms.  

FREMONT, CA: The stock market has perpetually been a core interest in predictive analytics. It is no surprise that clients seek help from Machine Learning (ML) to better choose their investment strategy. Attribution analysis of portfolios aims to discover the impression that a portfolio manager's investment decisions and approaches had on overall profitability. It can help decide whether success was the result of an informed choice or merely good luck. Usually, a benchmark is selected, and the portfolio's performance is evaluated relative to it. Portfolio managers make trading decisions on the client's behalf, ensuring maximum returns.

ML has begun to make inroads as portfolio managers understand that the knowledge to extract value from big data is going to be a pivotal differentiator. Analytics using ML can be more sturdy than regular financial modeling. It can tap into the streams of unregulated data that social media and global digitalization are creating. The capital market industry is in a state of variability due to the acceleration in passive investing. With the shift from commissions to level fees, many portfolio managers are investing massively in technology to mitigate operating costs to comply with the regulators' increasing demands for transparency. Leading portfolio managers have also realized that this also presents a substantial opportunity to invest in advanced data analytics and ML capabilities.

Portfolio managers are using predictive analytics to create investment ideas or as an advanced warning system for assets at jeopardy. ML technology is becoming prevalent with the changing industry waves in the portfolio management business as digitalization transforms it into a technology-driven one. Savvy investment managers are thinking hard about the future of the industry as it is on the cusp of technological arms.    

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