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The asset management industry is finding talent from Facebook, Amazon, Netflix and Google and lending itself to artificial intelligence.

Is Artificial Intelligence the New Disruptor?

Given the confluence of factors needed for Uber, Lyft, and other ride-sharing companies to successfully disrupt the transportation industry, a similar ‘perfect storm’ is beginning to form in the asset management industry. There is a growing opinion that a comparable set of factors are lending itself to the rise of artificial intelligence (“AI”)-driven hedge funds.

Historically, fundamentally driven fund managers have focused on structured financial data in order to evaluate industries and companies prior to an investment.  Fast forward to present day; we’re seeing a trend of ‘big data’ and its analysis – data scientists and machine learning – begin to disrupt the industry. Computers can analyze much larger sets of data than we’ve seen in the past – from social media data, press releases, satellite information, financial data and more.

Given the emergence of big data, data scientists and machine learning, are AI-driven funds the new disruptor for the asset management industry? Additionally, now more than ever, there is a direct link between Silicon Valley and Wall Street. As opposed to the typical process of a newly launched, promising fund manager spinning out of well-known, successful fund, the industry is now experiencing the rise of the ‘FANG’ talent – talent from the likes of Facebook, Amazon, Netflix and Google – individuals who are able to apply big data to their investment process to yield above average returns.

Jaclyn Greco is a Financial Services Group Manager providing business consulting services to alternative investment funds, including hedge, private equity, and venture capital funds, primarily situated in the pre-launch stage.

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