Trends Watch: Technology-Driven Hedge Funds

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Pal Kiil, Founder & CEO, Utopia Capital Management. 

What is your outlook for alternative investments?

In the world of alternative investments, I am on the lookout for scalable investments that are not correlated with the general market and performance.

Taking one step back and looking into who or what strategies are making the most money in the market, we find that they are all technology-driven hedge funds like Renaissance Technologies and algorithmic market makers like Citadel Investment Group, as well as algorithmic trading strategies used inside the big banks and sovereign wealth funds.

I believe alternative investments are like the internet, with technology-driven strategies and performance growing at an unprecedented rate outperforming what was previously done manually, and the place to be for the upcoming future.  

What are the greatest opportunities you see and why?

With the rise of AI and technology turning over stones and black boxes spitting out strategies at an increasing rate, the greatest opportunities are niche strategies across markets that either previously were not found or until now have been manually executed by humans, reverse engineering them and scaling them horizontally. 

What are the greatest challenges you face and why?

The challenge comes as investors see their strategies yield diminishing returns, lose money and see the outsized returns in technology-driven alternatives that optimize out the edges in the markets with too many assets under management (AUM).

What keeps you up at night?

Being an entrepreneur from Norway who took the leap of faith to set up shop in San Diego, California and then saw the benefits of also being located in Puerto Rico on the East Coast and balancing relationships in three time zones has been a challenge but I am grateful for the process, support and understanding I am receiving on the journey.

Together with my team we are receiving a large number of strategies that we reverse engineer, deep dive into new ones, and create scalable high return/low risk algorithms as portfolio management products for our clients.

What keeps me up at night is contemplating on the optimal way of growing our firm, balancing R&D, accepting new clients and providing optimal returns.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.