To enhance their stock-buying decisions, UOB Asset Management (UOBAM) has implemented an AI-augmented approach to investment. Their funds, United Asia Fund and United Greater China Fund have shown consistent outperformance, incorporating AI into their investment processes.
Since the incorporation of AI, the United Asia Fund has consistently outperformed the MSCI AC Asia ex-Japan Index by an average of 5.3% annually over the last three years. This is a significant achievement that demonstrates the effectiveness of the AI-augmented approach. Similarly, the United Greater China Fund has surpassed the MSCI Golden Dragon Index by 8.3% annually in the same time frame, further reinforcing the success of this method.
The head of investment technology at UOBAM, Mr. Paul Ho, emphasized that all Asia equity funds managed by UOBAM will eventually adopt this innovative AI-augmented approach. While the client base remains retail, mainly investors, institutional investors, and family offices are beginning to show interest in this method.
The AI-augmented approach at UOBAM is a sophisticated method that uses artificial intelligence to distinguish between promising and less promising stocks. It evaluates company financials, macroeconomic data, and technical analysis. Each stock is then ranked based on its expected return, with the top 100 stocks shortlisted for further scrutiny. A monthly portfolio rebalance is conducted to include the best performers and phase out underperforming stocks, ensuring a dynamic and responsive investment strategy.
UOBAM deploys an algorithm similar to those used by retail giants Walmart, Amazon, and Netflix to manage the complexity of analyzing hundreds of indicators concurrently. This allows flexibility and adaptability in the investment process and entails processing more than 30,000 variables simultaneously, a task well beyond the human mind’s capacity.
This AI-based approach has been tested through different market cycles, proving its resilience during and after the pandemic. The model continuously learns from past events and market dynamics, providing better predictions for stock performance, especially during unexpected market shifts.
This success of UOBAM’s AI-augmented approach reinforces the potential of artificial intelligence in revolutionizing investment strategies.
