In This Article:
Big data, data science and artificial intelligence (AI) technologies like ChatGPT are shaping the finance industry, and asset manager BlackRock is bullish about using these fast-evolving technologies to help clients build better portfolios.
An AI model using machine learning can crunch massive amounts of data to help investment analysts assess economic conditions, said Jeff Shen, co-CIO and co-head of systematic active equity at BlackRock, the world's biggest money manager with US$9.42 trillion in assets under management as of June 30.
Daily news, broker reports, expert insights and government statistics all provide data that can be analysed by AI to give clues about the underlying economic situation, he said. Meanwhile, geospatial information can be used to identify trends by analysing patterns in, for example, the movement of trucks in and out of a company's warehouses, or foot traffic in a city.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"We are in this world where big data is upon us, and a lot of things can be measured that could be relevant to investment," Shen said at a media round-table in Hong Kong on Tuesday. "Generative AI and big data is transforming pretty much every industry out there. I don't think investment will be immune to it."
Generative AI tools based on large language models (LLMs) such as Microsoft-backed OpenAI's ChatGPT and Baidu's Ernie Bot, as well as image-based generative tools such as Midjourney, have gone viral around the globe this year, attracting the attention of businesses eager to find ways to exploit the technology.
Shen leads a team that includes "people with PhDs" such as computer scientists, engineers, physicists and mathematicians, as well as traditional finance analysts. The team is already using LLM-based AI to help construct portfolios.
"We're investing in it because we believe that this will be very transformational," Shen said, adding that the company's investment is less about efficiency or replacing humans and more about augmenting the process of analysing investments.
LLMs are deep-learning AI algorithms that can recognise, summarise, translate, predict and generate content using very large data sets.
BlackRock is not using such AI off the shelf, but has invested in developing finance-focused language models, trained on text specific to financial markets and investing.