Investors find rare comfort in data science

Investors find rare comfort in data science

NEW YORK: The Phillips Curve is in doubt, the bond market is distorted and a tweet from President Donald Trump can shift the trajectory of global markets in a matter of seconds. In a world where traditional touchstones of fund strategies are being challenged by unprecedented economic-policy uncertainty, investors are seeking information not tapped before or better ways to sift through it. Some are stepping up the use of machine-learning to capture market sentiment on everything from the trade war to recessions. Whether these strategies are more effective than conventional methods remains to be seen, but they’re already paying off for some funds. In a Bleecker Street loft in downtown Manhattan, Vasant Dhar, the founder of a US$400mil hedge fund and a pioneer of AI investing, finds his computer-driven trading is just the thing for the Trump era. He uses a programme that captures not just securities prices, economic data and news sentiment but also market fears – studying patterns of volatility. In Boston, Eaton Vance Corp has a four-person data science team studying anonymous credit-card spending information, customer sentiment from social media and ETF flows on top of the fundamental work of its equity portfolio managers. “At times, the market has been behaving like a naive schizophrenic that puts all faith in only the most recent trade tweet,” said Eddie Perkin, chief equity investment officer at Eaton Vance. “As humans, we know we have intellectual biases that can lead us to flawed decision-making such as reacting to false […]

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