ODDO BHF Asset Management has launched ODDO BHF Artificial Intelligence fund. Launched in December 2018, this fund invests in international equities.
It is first thematic fund to invest in artificial intelligence, using artificial intelligence (AI) in its investment process.
Nicolas Chaput, global CEO and co-CIO of ODDO BHF Asset Management, said: "This fund represents a breakthrough innovation in the asset management industry. We have built a unique investment process, artificial intelligence and many years of know-how in the asset management industry quantitative equity management. Our goal is to provide our customers with an innovative solution for long-term alpha generation. The use of artificial intelligence in our investment process is undoubtedly a significant and groundbreaking step forward. "
Through its innovative investment process, the fund ODDO BHF Artificial Intelligence seeks to invest worldwide in those companies most positively impacted by the AI theme. The investment process is structured in three stages:
First, a new AI-based model is used to select the best global stocks linked to the AI theme, based on the daily analysis of millions of sets of data.
In a next step, the quantitative model - called "Algo 4" - that screens the stocks based on four factors (valuation, quality, momentum and market capitalisation) is applied to this investment universe, allowing to narrow it down to 60 equities exhibiting the most interesting financial and risk profile accordingly. "Algo 4" has been successfully applied by ODDO BHF Asset Management for more than 10 years in its quantitative equity management.
Finally, this portfolio is then subject to a qualitative review conducted by the fund managers. The purpose of this review is to identify any potential incoherence in the portfolio and to deepen the fundamental insight into the selected companies, in particular through meetings between the companies and the managers.
The result of the process is a portfolio of around sixty global equities. At the end of January 2019, 62% of the companies held in the portfolio were from the US, 11% from Japan and 5% each from the UK, Sweden and Switzerland. In terms of sector allocation, 58% of the portfolio are invested in technology stocks, with the remaining stocks being from the industrial, telecom, media, consumer and health sectors. Finally, nearly 50% of the stocks in the portfolio are medium-sized or small companies.