FondsDISCOUNT.de: Mr. Stürner, PEH EMPIRE P (ISIN: LU0086120648) pursues an AI and big data-based investment approach – what still needs to be done in collaboration with the machine for humans?
Martin Stürner: Well, humans are the foundation of artificial intelligence: the algorithms used by AI are developed and programmed by asset and portfolio managers in collaboration with computer scientists. The asset managers develop requirements for the machine, which are then implemented by the programmers. So without humans, AI would not exist at all. In addition, the actuality of the AI lives on the fact that the algorithms are constantly being further developed and the data checked. The approaches – both to control and to optimization – come from people.
So when we invest, people and artificial intelligence work as a team: The artificial intelligence calculates micro-, macro- and sentiment results. The fund management responds to the signals from the scores and eventually implements the results.
How big is your team and what roles are there?
Our team consists of three portfolio managers and two IT and data analysts with clear roles and responsibilities: Head of Asset Management makes all specifications for programming and optimizing AI. The IT and data analysts program and monitor the system, and they constantly implement optimization approaches from Head of Asset Management. Finally, the portfolio managers implement the signals from the different scores calculated by AI.
How to imagine the concrete collaboration with artificial intelligence? At the end of the analysis process, does a computer spit out a document with the relevant data needed for the final decision? Or do you and your employees decide what information you want access to?
In fact, AI provides clear results for the implementation of our portfolio managers. An intervention in these results is not desired: This is the only way we can prevent emotional action, which often leads to wrong decisions.
We have developed an active investment process, PEH score called. This is based on a systematic and structured form of information processing of all data: micro (business data), macro (economic data) and sentiment (market data). The main objective is, so to speak, to avoid an immunization of the investment decision with regard to cognitive misjudgments.
AI makes it possible to process all available information efficiently and objectively.
We evaluate the micro, macro and sentiment scores independently for portfolio allocation. There are no guidelines for the fund regarding the distribution of asset classes. Depending on the signals the scores give us, for example, we can reduce the stock ratio to zero percent if necessary. Due to the current situation in the financial markets, we are currently only just under 16 percent invested in equities.
The signal quality is particularly important: if a signal is clear in the positive or negative range, this has a strong impact on the opportunity risk potential for the respective range scores. The fact that this strategy works shows the good risk-return ratio by PEH EMPIRE.
What does a typical workday look like in your life as a fund manager? In the life of one of your employees?
A typical working day starts with our daily on-call fixe with the whole team at 9 in the morning. The portfolios and the strategy are coordinated, which are then adjusted if necessary.
The risk parameters are then adjusted and the performance, risk measurements and ESG scores given to us by the AI are inspected. Together we discuss the individual scores and check their plausibility. If necessary, there is a process optimization.
Following on-call fixes, the portfolio managers take over the implementation of the portfolio: equity positions are bought and sold, the investment ratio is adjusted and the new investment volume is planned.
In addition, the analysis of all relevant financial markets (Asia, Europe, USA) is part of the typical daily routine of a fund manager.
Finally, it is important to stay in touch with investors, to coordinate with them and to inform them about the development of the investment process. For this purpose, Investment Committee meetings are held on a regular basis or ad hoc as needed.
What fascinates you personally about working with artificial intelligence?
I am particularly fascinated by the gigantic possibilities of data and information processing and the emotionless implementation. The AI filters through and analyzes huge amounts of data every day that a human could never handle! In this way, AI gives us a whole new approach to data analysis that we simply did not have before.
I also think the interaction between AI and humans is exciting. For example, while we humans simply can no longer work after a long day of work and our concentration decreases, AI does not get tired. She can actually work all the time and thus already calculate the scores, the signals that the team can then implement again directly on the next working day.
One point that we humans often have a particularly hard time with is not overestimating past decisions. AI has no problem with this – it acts rationally and does not stick to previous decisions when there are significantly different signals.
Do you think AIs will one day be able to take over your job completely?
No, I’m very relaxed and optimistic. As the saying goes, “Behind any AI there is a wise mind.”
Sir. Stürner, thank you very much for the interview!
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