The C$23 billion Canadian fund, OPTrust is embracing the power of technology to improve investment outcomes. Wei Xie explained the fund’s focus on two subdomains of machine learning – reinforcement learning and uncertainty modelling – and how they can be used together.[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Wei%20Xie%22%2C%22job_role%22%3A%22Co-head%20of%20multi-strategy%20investing%20team%2C%20OPTrust%20(Canada)%22%2C%22content%22%3A%22As%20a%20senior%20professional%20with%20a%20unique%20blend%20of%20experience%20across%20investment%20domains%2C%20Xie%20is%20currently%20focused%20on%20novel%20investment%20strategies%20including%3A%20digital%20assets%20(crypto%2C%20blockchain)%2C%20machine%20learning%20enabled%20liquid%20strategies%2C%20private%20and%20public%20crossover%20strategies.%20As%20co-chair%20of%20the%20incubation%20portfolio%20investment%20committee%20(IPIC)%20with%20a%20mandate%20to%20develop%20and%20implement%20novel%20strategies%20designed%20to%20accelerate%20investment%20capabilities%20at%20OPTrust.%5CnWith%20a%20breadth%20of%20investment%20experience%20spanning%20liquid%2C%20illiquid%20and%20innovative%20strategies%3B%20across%20traditional%20and%20alternative%20asset%20classes%3B%20he%20has%20a%20broad%20investment%20management%20skillset%20including%3A%20investment%20strategy%2C%20portfolio%20construction%2C%20macro%2C%20strategic%20relationship%20management%2C%20AI%2FML%2C%20governance%20design%20and%20stakeholder%20management.%22%2C%22image%22%3A%2244376%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fwei-xie-4b41ba16%2F%3ForiginalSubdomain%3Dca%22%7D%5D” title=”Speakers” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Amanda%20White%22%2C%22job_role%22%3A%22Director%20of%20institutional%20content%2C%20Conexus%20Financial%20%20(Australia)%22%2C%22content%22%3A%22White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20She%20is%20responsible%20for%20directing%20the%20bi-annual%20Fiduciary%20Investors%20Symposium%20which%20challenges%20global%20investors%20on%20investment%20best%20practice%20and%20aims%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20She%20is%20the%20editor%20of%20conexust1f.flywheelstaging.com%2C%20the%20online%20news%20and%20analysis%20site%20for%20the%20world%E2%80%99s%20largest%20institutional%20investors.%20White%20has%20been%20an%20investment%20journalist%20for%20more%20than%2020%20years%20and%20has%20edited%20industry%20journals%20including%20Investment%20%26%20Technology%2C%20Investor%20Weekly%20and%20MasterFunds%20Quarterly.%20She%20was%20previously%20editorial%20director%20of%20InvestorInfo%20and%20has%20worked%20as%20a%20freelance%20journalist%20for%20the%20Australian%20Financial%20Review%2C%20CFO%2C%20Asset%20and%20Asia%20Asset%20Management.%20She%20has%20a%20Bachelor%20of%20Economics%20from%20Sydney%20University%20and%20a%20Master%20of%20Arts%20in%20Journalism%20from%20the%20University%20of%20Technology%2C%20Sydney.%20She%20was%20previously%20a%20columnist%20for%20the%20Canadian%20publication%2C%20Corporate%20Knights%2C%20which%20is%20distributed%20by%20the%20Globe%20and%20Mail%20and%20The%20Washington%20Post.%20White%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20consists%20of%2022%20fellows%20and%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2243061%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
The C$23 billion Canadian fund OPTrust is embracing the power of AI to improve investment outcomes via two new strategies on re-enforcement learning and uncertainty modelling.
The pension funds hopes to deploy the strategy at a total fund level and combine it with the equity beta portfolio to create a risk reduced equity allocation.
At a high level, AI is used to better understand and inform risk in a scalable approach.
AI is challenging for investors because of the need to hire people with the right skills. It also involves investment in a data supply chain.
Using AI in risk management is scalable across different types of strategies and doesn’t need exotic data as it mainly involves working with price data.
OPTrust sought to design a process that used AI to discover when assumptions might be ineffective due to the function of changes in the market.
Reinforcement learning gives greater insight into the factors driving price action. Here AI allows investors to detect the non-linear impacts on prices that humans struggle to track.
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