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Majority of Hedge Fund Pros Use AI/Machine Learning in Investment Strategies

FAIRFIELD, Iowa, July 18, 2018 — Artificial intelligence and machine learning are reshaping the alternative investments landscape, but professional financial managers still make the most pivotal decisions. That’s the conclusion of the latest Barclay Hedge Fund Manager/Investor Survey, a quarterly report on the sentiments of professionals in the alternative investments sector.

The July 2018 edition of the Hedge Fund Sentiment Survey asked managers of hedge funds and commodity trading adviser (CTA) funds for their insights and experience with AI and machine learning (AI/ML). The survey found that:

  • More than half of respondents say they use AI/ML to inform investment decisions.
  • Two-thirds say they use AI/ML to generate trading ideas and optimize portfolios.
  • Just over a quarter use automation to execute trades.
  • Well over half have used AI for three or more years, and a third have used the technology for five-plus years.

“The 56% of respondents using AI/ML suggest we’ve passed the half-way point in the race to digitize alternative investment processes,” said Sol Waksman, founder and president of BarclayHedge. “But we can’t ignore that more than four out of 10 of the survey’s respondents still rely on conventional human thinking to guide their investment processes. Concerns about machines taking over the alternative investments landscape may be premature.”

"Most of the hedge fund managers surveyed are leveraging advanced algorithms and human judgment to deliver smarter investment decisions," Waksman said.

“The hedge fund pros we surveyed are not turning everything over to algorithms,” Waksman said. “Instead, they’re using them to formulate investment ideas and build portfolios informed by data analysis that the human brain could never hope to accomplish.”

Hedge fund managers were among the earliest adopters of advanced algorithms and artificial intelligence techniques, which helps explain why a plurality of survey respondents said they have been using AI/ML for more than five years.

The BarlcayHedge survey is conducted quarterly, with comprehensive results available here.

Sol Waksman is the founder and president of BarclayHedge. Waksman is an industry expert and experienced media source, providing perspectives on hedge fund and managed futures trends.

BarclayHedge is the global leader in providing independent, research-based information services to the alternative investment industry. Founded in 1985, Barclay currently maintains data on more than 6,600 hedge funds, fund of funds, and CTAs. No one has been in the business of collecting alternative investment data longer than BarclayHedge.

Institutional investors, brokerage firms, and private banks worldwide utilize BarclayHedge indices as performance benchmarks for the hedge fund and managed futures industries.