Northern Trust using AI to turn ignored data into alpha

InvestorDaily

Artificial intelligence is rapidly evolving from a back-office productivity tool into a powerful engine for alpha generation, with the biggest gains flowing to asset managers who are able to harness vast, previously untapped datasets. According to Michael Hunstad, president of Northern Trust Asset Management, the industry is entering a new phase where competitive advantage depends less on traditional analysis and more on processing the 98 per cent of company data that has historically gone unused.

“Only about 2-3 per cent of the data that a company produces is classically analysed by a fundamental approach,” Hunstad said at SuperReview’s CIO roundtable in Melbourne on 11 March. “So 97-98 per cent of the data that a company produces, whether it’s transaction data or marketing data, really goes unutilised in the investment process.”

While most firms deploy AI for productivity – automating spreadsheets, research, and workflows – Hunstad said the real opportunity lies in security selection and alpha generation. Northern Trust is mining this untapped data to gain an investment edge. Last year, the firm hired a 13-person team of quantitative strategists, portfolio analysts and quantitative developers in the Netherlands focused on extracting “alpha” from intellectual property, patents, and trademarks.

The rest of this article can be found at investordaily.com.au.