Human and machine: the potent combination powering our new equity funds

10-Sep-2018
By André Bantli

Financial market data, economic releases, and scientific and sociological datasets are just some of the footprints we leave as we move through our increasingly digitalised lives. Taken together they are known as big data. Using AI-powered analytics, BlackRock can identify patterns and useful information within it and uncover investment opportunities. The most promising of these are implemented in our Advantage equity funds.

The six funds (see below) follow a systematic alpha approach, a form of active management that applies investment insights and technology. Their aim is to deliver long-term capital growth and differentiated returns that beat both the market and a generic factor approach.

The best of both worlds

BlackRock uses proprietary tools and analytics to sift through billions of new data points each day, which are fed into a mode which then informs investment decisions. We continually monitor the process to ensure it remains optimal.

This research-driven process (see chart) uses data signals across several dimensions to attain an alpha score – essentially a performance prediction – for each stock. We also apply the BlackRock responsibility overlay, which automatically excludes investments in thermal coal, controversial weapons and violators of the UN Global Compact.

Think smart

Big data, artificial intelligence, active management all have a place in equity investment. With the combination of active equity investment management and cutting-edge analytics, BlackRock has created a range of funds that include the best of both worlds. Big data insights, and a systematic investment approach should result in more consistent and differentiated returns. While having risk awareness at the heart of its process.

To find out more about Advantage, or other BlackRock solutions, please get in touch.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Risks

Equity risk: The values of equities fluctuate daily and a Fund investing in equities could incur significant losses. The price of equities can be influenced by many factors at the individual company level, as well as by broader economic and political developments, including daily stock market movements, political factors, economic news changes in investment sentiment, trends in economic growth, inflation and interest rates, issuer-specific factors, corporate earnings reports, demographic trends and catastrophic events.
Liquidity Risk: The Fund’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.
Currency risk: The return of your investment may increase or decrease as a result of currency fluctuations.

Managing Director
Head of Continental Sales for EMEA Retail