Ray Dalio's Bridgewater Associates Is Betting Big On Artificial Intelligence
Kelly Bit from Bloomberg published an article on Friday that revealed how Ray Dalio's Bridgewater Associates, a hedge fund with over $165 billion in assets under management, is starting a new artificial-intelligence unit next month.
The unit will not only use computers to make predictions, but these computers will be programmed to learn and adapt to new market conditions.
Bit, along with Agecroft Partners' Don Steinbrugge, was on Bloomberg TV this week to share the story.
New Strategy For Bridgewater
"So, Bridgewater, it's a new type of strategy for them with David Ferrucci from IBM," Bit explained.
"They are really banking on artificial intelligence, which is the type of computer programming that makes decisions similar to how a human makes," she added.
"There's new input of data, new information coming out to you all the time. These computer programs try to make predictions and investment decision based off of that. For Bridgewater, it's a new strategy..."
The Key To Success
When Steinbrugge was asked what Bridgewater is doing differently from other quant funds, he replied: "The biggest issue with quant funds is you have to keep enhancing the models, if you don't enhance the models they get stale.
"So, there are other people doing it, but there's not as many. It's very, very complicated. The quantitative managers who do really well are those who have very large research staffs and are constantly enhancing their models."
New Players In The Game
"Lot of hedge funds are piling into this space, trying to hire talent from the likes of Google, Facebook," Bit explained.
Tech companies already use predictive algorithms to analyze advertising and content, she added, "so hedge funds are now definitely banking on this."
According to a recent CNBC report, AI-driven hedge funds outperformed their human counterparts in 2014.
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