AI and Investment Management

As we start to examine investments in AI companies, it's important to reflect on the implications of this technology within our realm of investment management.



As we start to examine investments in AI companies, it's important to reflect on the implications of this technology within our realm of investment management. While championing the advancements in AI (see our piece on Gen AI thesis), for us the journey is not just about embracing external innovations; it's equally about scrutinizing and integrating these breakthroughs into our thinking and practices, especially as we observe the differential impacts AI is likely to have in public and private market investments.

Possibly controversially we believe that AI will more significantly impact public market investors than those in private markets because of the inherent differences between these sectors. Public markets, with their wealth of data and public disclosure obligations,   are more amenable to AI's data-driven approaches. In contrast, private markets, with their complex information asymmetries and subtler nuances, still rely heavily on human relationships, expertise and judgment.

Data Is King

At the heart of AI’s integration in investment management is its extraordinary capability to process and interpret complex and vast data sets, importantly quickly . This technological prowess transcends the limitations often encountered with traditional methods. AI provides a profound depth of market insights, enabling our fund managers to harness a level of understanding that informs strategic decision-making in ways and speeds previously unimaginable.

Particularly in public markets, AI's impact is more pronounced. The abundance of available data in these spaces offers fertile ground for AI algorithms to analyse trends and patterns, a task that is inherently more challenging in the private markets space. 

Relationships Matter

While AI has a transformative role in public markets, its influence in private markets is comparatively nuanced. The private markets, characterized by a lack of publicly available information and a reliance on personal relationships and nuanced understanding, present a unique challenge for AI.

Here, AI assists primarily in enhancing due diligence and processing data to identify potential opportunities and risks (see Aura Private Equity’s Data-Driven Private Equity Strategy). However, the human element remains paramount, especially in building trust and understanding the intricate needs of private clients.

Augmentation Is the Future

We believe the future of AI in investment management is akin to the synergy between a skilled pilot and advanced autopilot systems. While AI efficiently manages routine navigation, the pilot's expertise and judgment are critical, especially in unexpected scenarios.

In our journey with AI, we remain committed to maintaining this balance. AI is a powerful tool that enhances our capabilities, but the essence of our service — trust, understanding, empathy, and connection with our portfolio companies and clients — is irreplaceable.

Until next month,

Calvin Ng

Managing Director


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