Artificial Intelligence (AI) is revolutionizing the way we live, work, and play, presenting both challenges and opportunities for investors. In the realm of institutional asset management, AI has become a critical focus for asset owners as they navigate the intricate landscape of investments and retirement savings.
Defining AI is the first step in assessing its potential impact on the industry. It combines computer science with robust datasets to enable problem-solving, according to IBM. McKinsey defines it as a machine’s ability to perform cognitive functions associated with human minds. However, AI has been criticized as a poor choice of words from the past.
For Jacky Chen, director of total fund completion portfolio strategies at OPTrust, AI is about systems, tools, and machines that are programmed to think, act, or learn like humans. The key differentiator is the technology’s ability to learn and continuously improve by observing patterns.
Institutional asset owners like PSP Investments and APG Asset Management acknowledge the shift from deterministic outcomes to probabilistic outcomes in AI. This shift aligns AI technology with the way the human brain works. Deterministic code gives predictable outputs, while machine learning with probabilistic outcomes introduces the element of unpredictability.
Another significant development in AI is the interface between humans and machines. Language-based models, like ChatGPT, facilitate natural interactions and improve the ability to communicate complex data in accessible language.
As AI gains momentum, asset owners must understand its impact on the companies they invest in and seize the opportunities AI presents. The combination of vast amounts of data and enhanced computing power ensures that AI can streamline processes, identify new investment opportunities, and enhance productivity.
Fei Fei Li, a professor at Stanford University, stresses that AI’s moment has arrived, and it has the potential to transform businesses and deliver products and services with mass value. The profound implications of AI require asset owners to navigate this technology with caution and foresight.
In summary, AI is reshaping institutional asset management, offering immense possibilities and challenges. Its ability to learn, mimic human functions, and shift towards probabilistic outcomes make it a powerful tool for asset owners. Understanding AI’s impact on investments and leveraging its potential is crucial for securing the future of retirement savings.
The source of the article is from the blog tvbzorg.com