APG: How it affects man-machine balance with AI Alternative

APG Asset Management strongly believes in the “human-machine” balance, a concept the fund introduced in 2017 when it first began experimenting with artificial intelligence (AI), Peter Strikwerda. , according to the Global Head of Digitalization and Innovation. $615 billion pension investors.

“We use machines to augment our intelligence but never fully automate decisions or execute them without human supervision. Any decision in our investment portfolio is always made by people. are included,” Strykwerda said Asian investors.

Human decision-making is paramount, but currently AI-powered modules are being used within the fund’s investment strategy.

“We have something we call ‘real-time trade analytics,’ which advises our traders on the best strategy to make a particular trade – for example if we put $50 million into company X. “The AI-powered module provides guidance on how to do it at the best times of the day and at the right places,” he said.

APG’s most popular AI model is called “Samuel,” a digital portfolio manager used to make information and analytics instantly accessible to a fund’s alternative investment team.

“This is a big deal, because in private markets, information is not as well organized as in capital markets, so using generative AI and language models, someone with no programming experience can access the right data. Can use a prompt for access,” Strykwerda said.

The next step for the firm will be to develop a predictive AI model, which can potentially help determine which alternative assets will yield the highest return on investment.

“That’s something we’re currently experimenting with,” he said.

Think big, act small

Since launching the experiment, APG has taken a systematic approach to assessing the potential value of AI across its value chain. Part of this process includes keeping a regularly updated heat map.

“It’s basically a bit of a top-down approach to identifying areas where we think AI, and particularly generative AI, will have the greatest impact,” Strikwerda said.

“We’ll pick some of the areas that have the biggest impact and an acceptable risk assessment. Then we usually think big and do small. Which means we start with an experiment. will, for example, or by creating an infrastructure so that colleagues can experiment and collect evidence points to determine whether or not it makes sense.

For pension investors like APG, managing the balance between opportunity and risk when it comes to AI is critical.

“I am proud that our board has taken a proactive stance on AI adoption,” said Strikwerda. “We are engaging with regulators to address dilemmas in risk management and are striving to be at the forefront of implementing AI in investments,”

Enhanced intelligence

Asset manager T. Rowe Price has also been building capabilities to support its investment partners in data science, machine learning, and predictive analytics since 2017, according to Jordan Weinrobe, head of the firm’s New York City technology development center.

“Through alternative data access, natural language processing solutions, and predictive models, we’ve been able to empower our investment decision makers with data-driven insights,” Weinerb said. Asian investors.

Like APG, the asset manager has adopted an “intelligent augmentation” strategy as opposed to automated decision-making through AI.

“We bring the power of data and insights to human decision makers in their current processes,” said Vinarub. “This approach has enabled us to develop our capabilities in a thoughtful way, leveraging the capabilities of AI to help shift the human decision maker to higher-value tasks in the investment process. “

As generative artificial intelligence (GAI) continues to evolve rapidly, continued collaboration and evaluation of new offerings is essential to understanding how best to integrate the technology into business processes, he said.

“We see that GAI supports the 3 C’s: Consumption, Characterization, and Creation. As the flood of information for our research analysts increases, GAI can quickly consume textual content, finding signals within the noise. to do, and can help by facilitating the creation of new content in notes, emails and presentations,” explained Vinarub.

These capabilities promise to provide a productivity lift to business processes as well as the firm’s overall investment process.

“Firms that navigate these changes and learn how to integrate capabilities into their business will be best positioned to grow and thrive,” Vinarub said.