Uber has disrupted the auto industry, Amazon (AMZN) has changed the retail landscape and Expedia (EXPE) has forever altered how we book travel. Similar examples exist for nearly every industry. In the words of the Nobel Prize winning Bob Dylan, “The times they are a changin’.” For investors, today’s era of sophisticated artificial intelligence and algorithm-based trading systems means that there’s no excuse for settling for mediocre returns; but make sure the technology is solid, so that these returns last!
Around the world, investment managers are taking a closer look at artificial intelligence and the ramifications it can and/or will have on their future business models. Some are embracing this new technology while others are just dipping their toes into the water.
BlackRock Inc. (BLK), one of the world’s largest fund managers, recently announced that it would replace 40+ human portfolio managers with artificial intelligence as the beginning of its move to fully incorporate new technology and algorithmic approaches. The hedge fund Bridgewater Associates uses AI to predict market trends, Goldman Sachs uses an AI-based financial research platform, and other major companies including UBS (UBS) and Deutsche Bank (DB) also have AI systems in place.
Additional evidence of the importance of AI as a disrupter of the financial services industry is a recent study by Opimas, which reports that financial companies will spend $1.5 billion+ on AI-related technologies in the near future and up to $2.8 billion by 2021.
It’s important to note that it’s not just the “big boys” who are using AI. Many smaller, more nimble emerging managers have top tier AI systems in place that are often far surpassing larger firms in terms of investment returns. Through the years there have been many studies touting the proven strong investment performance of smaller funds vs. larger funds and the new world of AI-based investing is no exception.
Mediatrix Capital, an early adapter of advanced algorithms and artificial intelligence, began using this technology to trade high yielding niches in the gold, silver and currency spot markets early on. In fact, they began developing Forex Spot Market algorithms in 2007 and by late-2013, went live trading. As of April 2017, Mediatrix has achieved 40 straight months of client gains, from December 2013 to the present date.
Throughout these last 3+years, these systems have achieved 150%+ returns while managing the downside risk of trading. Investors benefit from a high investment growth rate, total account transparency, exceptional liquidity and world class monthly returns that have a multi-year track record. It’s anyone’s best guess whether this stellar performance would be possible without the use of advanced technology; however, let’s just say that history proves the point, and the principals of the firm would contend it is both the incorporation of decades of experience and knowledge of the market woven into the functionality of their technology, that makes such a system a proven winner.
And what’s the real point? Quite simply, it is that whether you’re a substantial family office, a high net worth private investor, an endowment, foundation or fund of funds, you have a responsibility to seek out managers that outperform the rest. Look for audited numbers, investigate the team, open that elusive black box, and insist on transparency, liquidity and strong risk systems.
In your search for Alpha, don’t forget that in addition to paying attention to the technology, there is also a human team making that technology “tick.” You should be 100% comfortable with the manager(s). If you are not, run and run fast in the other direction. Trading systems are not just about mathematics and programming. There is no substitute for real market experience and the understanding of market cycles and black swan events. How else can technology be developed to prepare for and withstand these events, if the master minds behind these systems have not experienced many adverse variables in their lifetime?
Indeed, utilizing proprietary artificial intelligence and algorithmic approaches that incorporate overlay and absolute return strategies now make it possible to achieve stellar returns that most thought not possible. Don’t settle for less!
For further information on how Mediatrix Capital helps family offices, visit www.mediatrixcapital.com or call 1-800-905-1006.
* Article statistics from Opimas and Financial Planning.
In no event should the content of this material be construed as an advertisement, express or an implied promise, guarantee or implication by or from Mediatrix Capital Inc. (MC) or any of its partner or subsidiary companies. This is not an attempt to sell or solicit any security and should not be taken as such. The content of this document is for informational purposes only. Potential Accredited Investors are advised to carefully read the Disclosure Documents to determine whether a managed investment in MC is consistent with their financial situations and investment objectives. Past results are no guarantee of future performance. Mediatrix Capital is a foreign corporation based in Nassau Bahamas, and does not operate within the United States.
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