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Aberdeen launches AI fund as manager backs machines to time markets

Aberdeen Standard Investments has launched a new global equity fund that will use artificial intelligence to select investments.

The Aberdeen Global Artificial Intelligence Global Equity is a SICAV-structured fund launched in Luxembourg, and will use so-called “machine learning” and quantitative techniques to time market moves and attempt to identify areas of excess risk-adjusted returns.

The fund is a collaboration between Aberdeen’s Quantitative Investment Strategies unit, Mitsubishi UFJ Financial Group’s Investment Technology Institute and MUFG’s Trust and Banking Corporation in Tokyo, Japan.

The fund will assess factors such value, quality, momentum, small size and low volatility that can impact on risk-adjusted returns.

QIS global head David Wickham said: “This is an innovative AI-powered approach to factor timing, that enables us to systematically determine the weightings to each factor within the new global equity fund and also allows us to time the relevant individual metrics used within those factors.

“We can now bias our portfolio towards the factors best suited to today’s market environment and continue to evolve the factor exposures as the market changes through time.“

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The project is the first time the Investment Technology Institute has  collaborated with an European company according to its president Junichi Narikawa: “We have worked with their QIS team in London and Edinburgh over a two-year period, and  developed a number of innovative AI-models to identify and capitalise upon patterns in global equity markets in order to dynamically time factor premia to generate alpha.”

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Aberdeen says that the newest developments is extension of the firm’s existing factor investing strategies. Wickham says: “This new technique builds upon our existing diversified multifactor investing strategies – namely Smarter Beta and Better Beta that we have successfully employed for over a decade.

The fund has initially been registered for sale in Luxembourg, Switzerland and the United Kingdom.

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