60 seconds on data science in fund management
Ben Wicks explains how fund managers are using data science to improve their investment returns.
The fund management industry is an information industry at heart – fund managers have to take information in, process information, and derive insights from it and then place an investment that reflects that judgement.
So, at its core, information is the input into the decision-making process. To get an edge in fund management, you need to be doing something better than the other person on the other side of the trade in the market, ultimately – that’s how you find alpha.
So, alpha can come from better analysis of information, better combinations of investments and risk management, or it could come from better information in the first place.
This is where we think data science becomes very interesting because if you bring in a very large amount of data that has relevance to an investment, you can extract insight from that information using data scientists and there’s a good chance that you might discover something that another investor – or potentially no other investor – has discovered.
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