Artificial intelligence

March 2019

Artificial Intelligence, or more simply, A.I., has captured our collective imagination since the 1950s when the idea was first introduced in the modern sense. It was popularized in media even earlier by Isaac Asimov who introduced the three laws of robotics, and later more famously in the film series The Terminator. A discussion of the topic causes some to envisage some extreme scenarios, while others can feel that something that has been so long in coming cannot truly be real.

The purpose of this paper is to illustrate that not only has A.I. become a reality in our day-to-day lives, but that it is already impacting investment portfolios as well as the investment process in many cases. While A.I. looks nothing like the doomsday scenarios portrayed in blockbusters, it can come in many different forms. Understanding the best opportunities to make use of this quickly expanding technology can be a challenge, but keeping a focus on the ‘how’ and the ‘why’ it is valuable is the clearest path to a successful implementation. In the vast majority of cases, A.I. either expands or improves upon processes that are already in use. While the mathematics and technical details behind an A.I. algorithm can be very complex, the fundamentals of A.I.’s value-add should be clear and interpretable.