Meta-AI fund launched by $60+bn European asset manager

ODDO BHF Asset Management has recently launched ODDO BHF Artificial Intelligence, the first thematic fund investing in artificial intelligence and also using AI in its investment process. Launched in December 2018, this fund invests in international equities.

Nicolas Chaput, global CEO and co-CIO of ODDO BHF Asset Management, said in a statement: “This fund represents a breakthrough innovation in the asset management industry. We have put in place a unique investment process that combines artificial intelligence and our long-standing know-how in quantitative management…Using artificial intelligence in our investment process is undeniably a major and pioneering move forward.”

Through its innovative investment process, the fund ODDO BHF Artificial Intelligence seeks to invest worldwide in those companies most positively impacted by the AI theme. The investment process is structured in three stages:

First, a new AI-based model is used to select the best global stocks linked to the AI theme, based on the daily analysis of millions of sets of data.

Next, the asset manager’s quantitative model – called “Algo 4” – that screens the stocks based on four factors (valuation, quality, momentum and market capitalization) is applied to this investment universe, narrowing it down to 60 equities exhibiting the most interesting financial and risk profile according to us. “Algo 4” has been successfully applied by ODDO BHF Asset Management for more than 10 years in its quantitative equity management.

Finally, this portfolio is subject to a qualitative review conducted by the fund managers. The purpose of this review is to identify any potential incoherence in the portfolio and to deepen the fundamental insight into the selected companies, in particular through meetings between the companies and the managers.

The result of the process is a portfolio of around sixty global equities. At the end of January 2019, 62% of the companies held in the portfolio were from the US, 11% from Japan and 5% each from the UK, Sweden and Switzerland. In terms of sector allocation, 58% of the portfolio are invested in technology stocks, with the remaining stocks being from the industrial, telecom, media, consumer and health sectors. Finally, nearly 50% of the stocks in the portfolio are medium-sized or small companies.

“Artificial intelligence is already at the root of many technologies, such as algorithms used for internet search engines, in cloud technology or autonomous driving. For us, AI’s principal domains today are big data, automation, machine learning, deep learning and cognitive computing. Artificial intelligence is a silent revolution unfolding under our eyes that will transform all spheres of society and economy”, said Brice Prunas and Maxence Radjabi, fund managers at ODDO BHF Asset Management SAS.

ODDO BHF AM is part of the independent Franco-German financial group ODDO BHF founded in 1849 with €54.4 billion ($61.7bn) AuM invested in European equities, quantitative strategies, fixed income, multi-asset solutions, private equity and private debt.

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