Hedge fund tech head on Gen AI: "Perfect is the enemy of good."
Companies across finance are starting to leverage generative AI in one form or another, and Man Group, a hedge fund managing over $161bn in assets, is no exception. At a roundtable discussion at Quant Strats 2023, co-head of front office technology Barry Fitzgerald spoke on how Man uses generative AI already and how its impact is already worth it.
"The most tangible use cases are in productivity," he said. "You can do it all yourself." For example, the fund uses an AI copilot in software development. "You can write a doc string for a function, and it will write the function." Another area being explored is "hypothesis generation," with AI functions consistently being diverted to Man's back testing framework "to avoid any hallucinations."
Where will it be used in the future? Fitzgerald didn't answer, but he did note that it took 20 years from the commercial launch of the GPS for Uber to be founded. New and innovative use cases are inevitable, we just don't know when they'll happen.
Not everyone at the conference had equally glowing experiences. Gökhan Cebiroglu, a PhD quant trader formerly of Credit Suisse is "very skeptical of neural networks," the tech underpinning many Gen AI systems. He said "a lot of people are still very naive" about the scope of its implementation, when in reality "whatever you get out is unstable." Cebiroglu says applying those models to anything and everything is a "tragedy;" it can't guarantee success.
Fitzgerald retorted with, "it's not guaranteed anywhere." Especially when dealing with a hedge fund the size of Man Group, he said, "you only need an ever so weighted edge to make money."
Rather than expect AI to faultlessly predict the market, Fitzgerald suggested we not look a gift horse in the mouth. He says it's "100% worth it" if all it does is "squeeze more juice" out of the existing investment process. Channelling Voltaire, he says, "perfect is the enemy of good."
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