Rebuilding investment strategies for the AI era

You can also listen to this podcast on iono.fm here.

SIMON BROWN: I’m chatting now with Duggan Matthews. He is CIO at Marriott. Duggan, I always appreciate the early morning time.

AI – and using it in the investing world. The first caveat I think we need to put out is that AI is just moving so fast. I was loving Claude Opus 4.6, and then literally weeks after it arrived 4.7 came. Of course, we know that Mythos is on the horizon too.

What you’ve done, you and your team at Marriott, you’ve kind of gone back to the beginning and rebuilt architecture from the ground up, using AI as a big part of that process.

DUGGAN MATTHEWS: Yes, Simon. Needless to say, ‘moving fast’ is probably an understatement. It’s going to be the technology of our lifetimes. I think everywhere everybody is starting to really feel that. It takes a while to adopt a change, but I think when the changes are profound you have to.

Read:
Why the world’s banks are so worried about Anthropic’s latest AI model
Amazon launches AI productivity software for office workers
Recent advancements in artificial intelligence models

For asset management in particular, if you think about what we do, we analyse data and look for trends and patterns – and it’s quite in parallel with what AI is doing.

So our view was we have to leverage this; this is a massive enabler for what we’re trying to deliver to our clients. And, being a relatively small business – a medium-sized business, we’re not a giant – there are resource constraints that we face.

But with AI essentially commoditised, a large part of intelligence, for us it has been massively exciting to leverage what we do. To do that we went back to the first principle and thought how much of our process can AI digest? Let it digest that; let’s not resist that if it’s good at it.

Let the AI do those tasks and free up our analysts to focus on areas where they can now continue to add a lot of value, which would be in interpretation of nuance and complexity and ambiguity – and investing is full of that.

That was the thinking; let AI do what it does well.

Let it continue to digest parts of the process that it’s going to be able to digest as it improves, and really build a team focused on dealing with the things that that the human mind is best at doing.

Read: World’s biggest pension fund sees AI replacing asset managers

SIMON BROWN: That’s a great point. And I like your point. Back in the day, size so much mattered. If you were the company with, I don’t know, a hundred analysts, you just had an advantage over the company with 10 analysts. That’s no longer the case, because AI is now doing that grunt work.

I do it. I will throw a ton of data to it, something that would take me days to do. Maybe I’m the slow guy in the room, but it would take me days. AI now does it a couple of hours. That leaves the analysts to do the thinking, which is the part that AI is perhaps not the best at.

DUGGAN MATTHEWS: Yes, absolutely. I just think [it’s] a massive playing-field leveller across industries, Simon. So the days of having a hundred analysts as your competitive advantage – those are long gone.

It’s really going to be the architecture around how you harness the AI, and how you harness the human, and how you get the most out of that architecture in a similar way to data.

If you go back many, many years, maybe an investment firm’s edge was data. Maybe they had more data than other investors. But data has been commoditised. There’s just so much data on publicly listed investments everywhere. So that sort of advantage from an investment perspective has been eroded.

Read:
Can AI assist with investing?
Hedge funds eye AI bots to track hundreds of stocks
What AI can do (and what it can’t)

Now when it comes to processing data, that is where the advantage moved. Now we have a tool like Bloomberg that can really process the data. So we have to recognise this as a threat to the proposition.

But having said that, if used wisely it is a massive opportunity and investors should be hugely excited about this, because their portfolios at the end of the day should be more risk-aware and produce better risk-adjusted outcomes if we use this technology and maximise its benefit for them.

SIMON BROWN: Yes. Investors, definitely. A quick question, a last question that comes to mind. Does [being] boutique now almost become the advantage? Back in the day it was size. Now it is not large size as the advantage. It’s actually small – perhaps boutique – as niche is the advantage.

DUGGAN MATTHEWS: Yes, I think smaller-sized firms have always had the benefit of being nimble, with maybe entrepreneurial cultures, established settled teams.

But the disadvantage or the trade-off was sometimes breadth and depth of coverage because you’re just not going to have as many analysts. So I think your medium-sized, smaller businesses are really going to be able to overcome that disadvantage while still providing the benefits associated with a smaller organisation.

So the two used to be in tension – and I don’t think so anymore, Simon.

Read: Advance financial processes with artificial intelligence

SIMON BROWN: We’ll leave that there. Duggan Matthews, CIO at Marriott. appreciate the early morning time.

#Rebuilding #investment #strategies #era