Smith & Williamson is to become the latest asset manager to launch an Artificial Intelligence (AI) fund seeking to capitalise on technological innovation.
Subject to regulatory approval, the actively managed global equity fund aims to provide investors with exposure to companies that are best positioned to take advantage of opportunities in the AI space.
Former Pictet managers Chris Ford and Tim Day will run a concentrated portfolio of between 30 and 35 firms, which derive the majority of their revenue and growth from AI.
Roughly half the portfolio will be held outside the US, and the managers say they will not be confined to more familiar sectors such as robotics.
Smith & Williamson claims that AI will also be used in the fund’s investment process via a proprietary model that will “enhance the efficiency” with which the managers invest.
The fund represents the first launch for Mr Ford and Mr Day since joining the firm in 2015. Between them they boast five decades of experience in North American and Global equity markets, with Mr Ford specialising in the technology sector and Mr Day focusing largely on US and global shares.
Charges for the fund, which is scheduled to launch in June, were not disclosed.
Comment:
Artificial intelligence funds are fast becoming like the proverbial buses: Allianz Global Investors launched Europe’s first such product in March and now Smith & Williamson has followed suit.
Any new arrival into the market which does not have a tried and tested investment approach is bound to be met with a degree of scepticism, and these funds fall into that category.
While AI represents a growing topic of interest for businesses around the world, the technology is still at a nascent stage, which implies that these products will only be for investors with greater risk appetites.
The funds are likely to end up performing in a similar manner to other technology portfolios.
Whenever managers narrow down their playing field, the effect is a likelihood of increased volatility. But this is not to say that higher risk is the wrong approach. The likes of UK and US small-cap investors have found the opposite in recent years.
The challenge will be to attract investors that firmly believe AI has not only a positive future, but a positive present.
Although equity investment is a long-term game, investors will want to see immediate results. That is the gamble here, but it could potentially pay off.
