Publications

In this article we describe a framework for financial institutions that wish to manage geopolitical risks attached to their global investments. We define geopolitical risk management as identifying, assessing, and mitigating risks from political, economic, and social events (e.g., conflicts, sanctions, trade disputes or international supply chain disruptions) that could affect financial performance.

A comprehensive analysis suggests that a fundamental departure from a market-capitalization-weighted Strategic Asset Allocation (SAA) is unwarranted, as the high
concentration and elevated valuations in the U.S. equity market present only a modest potential drag on future returns and do not invalidate the efficiency of such indices.

We gebruiken het allemaal: artificiële intelligentie, oftewel AI, wordt steeds vaker in het bedrijfsleven ingezet om werkzaamheden te versnellen en te automatiseren. AI wordt gebruikt voor het schrijven van analyses, het genereren van beelden, het opstellen van artikelen en zelfs voor het screenen van sollicitaties. Deze technologie belooft efficiëntie, maar roept ook vragen op over betrouwbaarheid, eerlijkheid en verantwoordelijkheid.

Wat als de technologie die bedoeld is om te helpen, onbedoeld discrimineert? In 2014 ontwikkelde Amazon een geautomatiseerd systeem om sollicitaties te beoordelen. Het doel was om het wervingsproces efficiënter te maken door cv’s automatisch te scoren. Echter, het systeem leerde zichzelf om vrouwelijke kandidaten te benadelen. Dit kwam doordat het algoritme was getraind op historische data, waarin vrouwen ondervertegenwoordigd waren in technische functies. Uiteindelijk werd het in 2018 stopgezet toen bleek dat het systeem niet genderneutraal functioneerde.

“This article is not written by a large language model (LLM) but by a real human.” That one has to put that statement above is an astonishing fact that, even five short years ago, most people would have thought laughable. Of course, technology and its rapid advances and pervasiveness have dramatically impacted every facet of our lives and society. In one way or another, almost all industries and economic activities have been impacted by technology. Finance is no exception. In recent years, a particularly powerful form of technology, namely AI (of which LLM is the latest example), is poised to cause disruptive change on par with, if not more than, the steam engines during the industrial revolution, the computers in the information revolution, and the internet during the communication revolution. 

In this article, we look at how technology has changed the institutional asset management industry in recent years. We look at this from the perspective of both fundamental and quantitative investors, in addition to non-investment functions such as marketing, operations, etc. We also offer a few hypotheses on how technology may further impact institutional investment practices in the near future. First, we briefly discuss three major technological trends driving such secular change.