Time for tech

In January this year, the annual World Economic Forum (WEF) meeting in Davos, Switzerland proceeded to explore the theme of the fourth Industrial Revolution – encompassing all the changes associated with digitalisation of economic activity.

Despite a significant range in the predictions the consensus trend seems clear: job losses counting in the millions will be unleashed by advances in technology – and this will be increasingly up the value chain.

The WEF’s own report into the issue points to 5 million jobs cut in the next five years as the result of technology such as artificial intelligence.

The Bank of England calculated last year that 15 million jobs in the UK alone are under threat from automation.

The International Federation of World Robotics has suggested that the supply of industrial robots globally is growing by 15% annually.

The question for both asset managers and fund selectors, then, is to what degree they feel their roles may be under threat.

For some it has clearly been a time of growing opportunities.

In 2014 ETF Securities partnered with Robo Global to launch the first European ETF providing exposure the global robotics and automation sector.

Based on an index from Solactive, they launched the Robo Global Robotics and Automation GO Ucits ETF.

Richard Lightbound, partner and CEO at Robo Global, recently noted that “factors such as ageing populations, wage inflation, safety and sustainability are driving the need for and
adoption of robotics and automation”.

“What the business community and investors might not realise is that robotics and automation is bigger than just the industrial and manufacturing sector. The most significant
growth is actually expected from personal and services sectors with 17.4% and 12.3% CAGR between 2010 and 2025 according to Boston Consulting Group.”

In Sweden, Coeli Asset Management launched a strategy in January this year called Prognosis Machines, which uses machine learning to find investments for a systematic global
macro strategy.

Manager Alex Gioulekas spent two years building Prognosis Machines. Beyond the fund product impact, early February in London saw Israeli startup Capitali.se win the FinovateEurope
2016 Best in Show award for a platform that allows users to write instructions in everyday language, which are then ‘translated’ into executable automated trades.

Matteo Cassina, CEO, Saxo Capital Markets, notes how his company’s Saxo TradingFloor platform which allows investors to follow each other’s trading activity has been further developed,
so that users trades are made automatically, based on the actions of other traders being followed.

This has been made possible in the regulatory sense by use of managed accounts, but from a technology perspective, it is about enabling users to make trading decisions based on the decisions of others who may be more skilled as investors.

“SaxoSelect also enables those with skill and talent to create a track record – through the management of their own money and the money that others have delegated to them – and help them in
the path to becoming a professional money manager.

“As such, SaxoSelect is further democratising access to investment management – both from the perspective of the end user of the service – end investor – as well as the provider of the service – the manager,” Cassina says.

Needless to say, such developments are set to impact the way selectors work – if only to figure out ratings of systems supporting collective investments that rely on the ‘intelligence’ of machines.

Kevin Endler and Daniel Kröger are portfolio managers at Acatis. They note particular aspects of the Davos discussion in the so called “internet of things” – devices connected to other devices
– big data, robotics and artificial intelligence.

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