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Al Naqvi. Artificial Intelligence for Asset Management and Investment
Table of Contents
List of Tables
List of Illustrations
Guide
Pages
Artificial Intelligence for Asset Management and Investment. A Strategic Perspective
Preface
Acknowledgments
Chapter 1 AI in Investment Management
WHAT ABOUT AI SUPPLIERS?
LISTENING WITHOUT JUDGING
Lessons from ALI
THE FOUR STAGES OF AI IN INVESTMENTS
Stage 1: The Siloed Quant Era
Era 2: The Strategic Quant Era
Stage 3: The Organizational Chaos Era
Stage 4: The Modern Investment Firm
THE CORE MODEL OF AIAI
YOUR JOURNEY THROUGH THIS BOOK
HOW TO READ AND APPLY THIS BOOK?
REFERENCES
Chapter 2 AI and Business Strategy
WHY STRATEGY? THE RED BUTTON
AI—A REVOLUTION OF ITS OWN
INTELLIGENCE AS A COMPETITIVE ADVANTAGE
Intelligence in Products
Intelligence in Production Platforms
Intelligence of an Interlinked Network of Systems
INTELLIGENCE AS A COMPETITIVE ADVANTAGE AND VARIOUS STRATEGY SCHOOLS
THE INTELLIGENCE SCHOOL
INTELLIGENCE AND ACTIONS
ACTIONS
AUTOMATION
INTELLIGENCE ACTION CHAIN AND SEQUENCE
ENTERPRISE SOFTWARE
DATA
Data Management Expertise
Partnering, Buying, and Building
COMPETITIVE ADVANTAGE
BUSINESS CAPABILITIES
Chapter 3 Design
WHO IS RESPONSIBLE FOR DESIGN?
INTRODUCTION TO DESIGN
AI AS A COMPETITIVE ADVANTAGE
THE TEN ELEMENTS OF DESIGN
1. DESIGN YOUR BUSINESS MODEL
2. SET GOALS FOR THE ENTIRE FIRM
3. SPECIFY OBJECTIVES FOR AUTOMATION AND INTELLIGENCE
4. DESIGN WORK TASK FRAMES BASED ON HUMAN-COMPUTER INTERACTION
5. PERFORM A DTC (DO, THINK, CREATE) ANALYSIS
6. CREATE A SADAL FRAMEWORK
7. DEPLOY A FEEDBACK SYSTEM AND DEFINE PERFORMANCE MEASURES
8. DETERMINE THE BUSINESS CASE OR VALUE
9. ANALYZE RISKS
10. DEVELOP A GOVERNANCE PLAN
SOME ADDITIONAL IDEAS ABOUT DESIGNING INTELLECTUALIZATION
SUMMARY OF THE DESIGN PROCESS
REFERENCES
NOTE
Chapter 4 Data
WHO IS RESPONSIBLE FOR THE DATA CAPABILITY?
DATA AND MACHINE LEARNING
RAW DATA
STRUCTURED VS. UNSTRUCTURED DATA
DATA USED IN INVESTMENTS
DATA MANAGEMENT FUNCTION FOR THE AI ERA
STEP 1: DATA NEEDS ASSESSMENT (DNA)
STEP 2: PERFORM STRATEGIC DATA PLANNING
STEP 3: KNOW THE SENSORS AND SOURCES (IDENTIFY GAPS)
STEP 4: PROCURE AND UNDERSTAND THE SUPPLY BASE
STEP 5: UNDERSTAND THE DATA TYPE (SIGNALS)
STEP 6: ORGANIZE DATA FOR USABILITY
STEP 7: ARCHITECT DATA
STEP 8: ENSURE DATA QUALITY
STEP 9: DATA STORAGE AND WAREHOUSING
STEP 10: EXCEL IN DATA SECURITY AND PRIVACY
STEP 11: IMPLEMENT DATA FOR AI
STEP 12: PROVIDE INVESTMENT SPECIALIZATION
ABOUT LEGACY DATA MANAGEMENT
REFERENCES
Chapter 5 Model Development
WHO IS RESPONSIBLE?
HIGH-LEVEL PROCESS
MODELS
THE POWER OF PATTERNS
TECHNIQUES OF LEARNING
WHAT IS MACHINE LEARNING?
SCIENTIFIC PROCESS ON STEROIDS
THE LEARNING MACHINES
ALGORITHMS
SUPERVISED LEARNING
Supervised Learning Methods
SUPERVISED: CLASSIFICATION
Classification: Decision Trees
CLASSIFICATION: RANDOM FOREST
CLASSIFICATION: USING MATHEMATICAL FUNCTIONS
CLASSIFICATION: SIMPLE LINEAR CLASSIFIER
Classification: Picking the Right Line
SUPERVISED: SUPPORT VECTOR MACHINE
CLASSIFICATION: NAIVE BAYES
CLASSIFICATION: BAYESIAN BELIEF NETWORKS
CLASSIFICATION: K-NEAREST NEIGHBOR
SUPERVISED: REGRESSION
SUPERVISED: MULTIDIMENSIONAL REGRESSION
UNSUPERVISED LEARNING
Unsupervised: Clustering
NEURAL NETWORKS
Deep Learning
REINFORCEMENT LEARNING
REFERENCES
Chapter 6 Evaluation
WHO PERFORMS THE EVALUATION?
PROBLEMS
MAKING THE MODEL WORK
OVERFITTING AND UNDERFITTING
SCALE AND MACHINE LEARNING
NEW METHODS
BIAS AND VARIANCE
BACKTESTING
BACKTESTING PROTOCOL
REFERENCES
Chapter 7 Deployment
REFERENCE ARCHITECTURE
THE REFERENCE ARCHITECTURE AND HARDWARE
REFERENCES
Chapter 8 Performance
WHO IS RESPONSIBLE FOR PERFORMANCE?
WHAT ARE THE WORK PROCESSES OF PERFORMANCE?
BUSINESS PERFORMANCE
TECHNOLOGICAL PERFORMANCE
REFERENCES
Chapter 9 A New Beginning
BUILDING AN INVESTMENT MANAGEMENT FIRM AROUND ARTIFICIAL INTELLIGENCE?
THE FALLACY OF GOING DIGITAL
WHY BUILD YOUR FIRM AROUND AI?
YOU MUST RELY ON YOUR OWN CAPABILITIES
WHAT IS ASSET SCIENCE?
The Client Loop
The Returns Loop
The Protective Shield
The Command Center
A HEALTHY CYCLE
THE TOOL SET
THIS IS NOT JUST AUTOMATION
REFERENCES
Chapter 10 Customer Experience Science
CUSTOMER EXPERIENCE
VALUE, STRENGTH, AND DURATION OF RELATIONSHIP
UNDERSTANDING CUSTOMERS: EMPATHY FOR CX
STEPS TO BECOME AN EMPATHETIC ASSET MANAGEMENT FIRM
KNOW YOUR EMPMETER
EXPAND EMPATHY AWARENESS AND UNDERSTANDING
INCORPORATE INTO PRODUCTS AND SERVICES
WHAT IS AUTOMATED EMPATHY AND COMPASSION (AEC)?
INCORPORATING AEC MARKETING
REFERENCES
Chapter 11 Marketing Science
WHO UNDERTAKES THIS RESPONSIBILITY?
HOW TO APPLY AI FOR MARKETING
BEGIN WITH ASSESSMENT
KNOW YOUR DATA
THE AI PLAN FOR ASSET MANAGEMENT MARKETING
PERFORM STRATEGIC PLANNING
MANAGE PRODUCT PORTFOLIO WITH AI
TRANSFORM YOUR COMMUNICATIONS
BUILD RELATIONSHIPS
EXECUTE WITH EXCELLENCE
REFERENCES
Chapter 12 Land that Institutional Investor with AI
WHO IS RESPONSIBLE FOR IRMS AUTOMATION?
IS IRMS YOUR CRM SYSTEM?
KNOW THYSELF: AUTOMATED SELF-DISCOVERY
AUTOMATED ASSET CLASS ANALYSIS
AUTOMATED INSTITUTIONAL ANALYSIS
AUTOMATED STRUCTURE AND TERMS ANALYSIS
AUTOMATED FEE ANALYSIS
AUTOMATED COMMUNICATIONS
UNLEASH THE POWER OF KNOWING
Chapter 13 Sales Science
WHAT IS SALES SCIENCE?
WHO IS RESPONSIBLE FOR IMPLEMENTING SALES SCIENCE?
ARE YOU DRIVING THIS IN SALES?
HOW TO BUILD YOUR AI-BASED SALES SYSTEM
Prospecting
Pre-Approach
Approach
Presentation
Overcoming Objections
Closing
Follow-Up
REFERENCES
Chapter 14 Investment: Managing the Returns Loop
WHO IS RESPONSIBLE FOR INVESTMENT MANAGEMENT?
HOW TO APPROACH BUILDING THE NEW-ERA INVESTMENT FUNCTION?
THE CORE TOOL SET
WHAT WILL BE THE FUNCTION OF YOUR INVESTMENT LAB?
MAKE THE DECISIONS
A NEW WORLD
THE (UNNECESSARY) DEBATE
MORE BEHAVIORS
RESEARCH AND INVESTMENT STRATEGY
PORTFOLIO
PERFORMANCE
REFERENCES
Chapter 15 Regulatory Compliance and Operations
WHO IS RESPONSIBLE?
REGULATORY COMPLIANCE
WHY INTELLIGENT AUTOMATION?
HAVE YOU SCOPED OUT WHAT TO DO?
HOW TO DO IT?
HOW TO USE TECHNOLOGY FOR GIPS IMPLEMENTATION?
BACK AND MIDDLE OFFICE
Chapter 16 Supply Chain Science
WHO IS RESPONSIBLE FOR SUPPLY CHAIN SCIENCE?
HOW TO THINK ABOUT SUPPLY CHAINS
How Does That Translate into an Action Plan for AI?
REFERENCES
Chapter 17 Corporate Social Responsibility
CSR WOES: CAN PROCESSES EXPLAIN THEM?
WHAT ARE THE CRITICISMS OF CSR?
MEASUREMENT ISSUES
BEHAVIORAL AND ROLE ISSUES
STRATEGIC AND ORGANIZATIONAL ISSUES
HOW TO APPLY AI IN CSR? Fix the Measurement Processes
CSR MUST NOT BE FORGOTTEN
ESG INVESTMENT
HOW CAN AI HELP?
YOU MUST AVOID THESE MISTAKES
SUMMARY STEPS
REFERENCES
Chapter 18 AI Organization and Project Management
THE NEW ASSET MANAGEMENT ORGANIZATION
WHY A CAIO/COO ROLE?
WHAT IS CHANGING?
HOW TO GET THERE?
ISSUES OF THE NEW ORGANIZATION
Leadership Roles for the Legacy vs. Traditional
PhDs vs. MBAs Struggle
Science vs. Pseudoscience
Investment into AI
CHANGE MANAGEMENT
Fear of Unemployment
Work Planning
Reskilling
MANAGING AI PROJECTS
REFERENCES
Chapter 19 Governance and Ethics
CORPORATE GOVERNANCE WITH AI
GOVERNANCE OF AI
FRAMING THE ETHICAL PROBLEMS FROM A PRAGMATIC VIEWPOINT
SOME OBVIOUS ETHICAL ISSUES
HUMANS AND AI
ETHICS CHARTER
REFERENCES
Chapter 20 Adaptation and Emergence
THE REVOLUTION IS REAL
COMPLEX ADAPTIVE SYSTEMS
OUR CORONAVIRUS MELTDOWN PREDICTION
Index
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