Sanlam Global Investment Solutions (SGIS) is entrusting the management of its balanced fund to an artificial intelligence (AI) program.
The Sanlam Managed Risk Ucits fund was previously managed by a systemic investment process but its investment decisions will now be carried out by an advanced AI & machine learning (ML) investment engine, the firm has announced.
According to SGIS, the Ucits fund is the first balanced fund in the world to be fully driven by AI.
SGIS head of investments David Itzkovits said: 'The goal at SGIS was to find a solution that can adapt as quickly as the markets change. Our AI capability does this by applying the latest in ML techniques which have multiple years of live operational experience and a real, impressive track record.'
The AI driven process will utilize passive equity for growth and a protection strategy that is negatively correlated to equities. The fund aims to help investors diversify their balanced/mixed-asset fund manager risk.
He added: 'The AI investment engine derives its decision making in a different way to other investments and should be viewed within a client’s overall investment strategy as a diversifier of existing human manager risk.
'Because in today’s world, it’s not man vs. machine, it's man with machine vs. man without.'
Sanlam said AI and ML can be applied in investment management broadly in two ways:
- Enhancement of a manager’s current investment process by producing timelier asset allocation and stock allocation buy/sell signals on a portfolio of instruments chosen directly by the investment manager.
Or, (the way in which the SMR Fund is utilizing it)
- Total automation of the investment process, meaning the AI selects the optimal portfolio allocation based on a pre-defined investment strategy with objectives, constraints and investable instruments.