In AI quantitative investment, AI is used to predict how the market will react under different circumstances. This typically allows for many different data points to be analysed across many different asset classes, giving investors access to a wide range of investment instruments.
However, not all AI quant investment funds are created equal. Some perform much better than others and this is because of how technologies and data are combined.
In the case of Golden Horse Fund Management, its data sources are carefully curated and analysed using an elegant system that combines Artificial Intelligence, Machine Learning and complex mathematical modeling to track millions of data points across different instruments and global asset classes to predict next-day volatility.
The model is constantly learning and adapting to be able to accurately predict market movements.
This means the model is extremely dynamic and agile, allowing the fund to get in and out of positions ahead of changes in the market.
Asset allocation and diversification is of paramount importance in today’s uncertain markets. Quant investments typically provide investors with a diversified portfolio across different asset classes.
Our portfolio, in particular, is well-diversified across different asset classes such as equities, bonds and commodities, and are rebalanced on a daily basis. This unique practice is crucial during periods of high market volatility, and allows our funds to respond nimbly to shifts in momentum or fundamentals.
This approach takes the edge off attempts to optimise your portfolio, and allows you to future-proof your investments painlessly.
Unlike funds that require a key-man, we take a systematic approach that combines data, computing power, AI (artificial intelligence), ML (machine learning) and intellect to protect the performance of our funds.
This ensures we have an objective, bias-free and nimble approach to reading and predicting markets to ensure consistent high performance that is ahead of the market.
Not all quant funds are created equal. The quality of data, the mathematical modeling developed, how Artificial Intelligence and Machine Learning are integrated into the modeling, and how regularly the portfolio is rebalanced all work together to determine a quant fund’s performance.
There are three parts to the Golden Horse investment strategy:
- An extensively diversified global asset class: Our fund is diversified across a broad spectrum of asset classes including equities, bonds, commodities, currencies and reinsurance with high liquidity. Our quantitative model enables analysis of millions of data points across many different asset classes, giving our investors access to the best opportunities at any one point in time.
- Effectively managed risk: Dynamic adjustment of exposure levels along with strict risk management and periodic rebalancing minimise overall risk exposure and help achieve sustainable superior risk-adjusted returns over the long run.
- Targeted volatility: We adjust allocation within each asset class and leverage to target volatility of around 25- 30% to reduce any drawdowns while accelerating recoveries during volatile market conditions.
On average, the fund invests anything between 50 and 60 instruments across asset classes as diverse as bonds, equities, commodities and other derivatives, with investment into each instrument not exceeding 5 per cent of the fund.
When markets are behaving predictably, portfolio diversification can be fairly straightforward. However, with black swan events like the crash in 2008 and COVID-19, as well as unpredictable correlation matrix between equity and bond markets, portfolio diversification is becoming far more complex.
This is why the overlay of artificial intelligence and machine learning onto our advanced mathematical modelling is so critical in analysing these millions of data points. This gives our investors unrivalled diversification with in-built layers of protection to predict and respond ahead of market movements.
The expense ratio of our funds is less than 1 per cent and this covers all of the management fees and operating costs associated with the fund.
All estimated on the returns on our funds have already accounted for these expenses.
We have a target volatility ceiling that we strictly adhere to by ensuring that we increase our exposures during calm market periods and turn it down during turbulent market periods. Our strategies are designed for a high level of accuracy with an in-built ability to detect early warning signs.
While hedge funds mostly serve institutional and ultra-high net worth investors, Golden Horse is one of a few specialised quant hedge funds to broaden its access to not only include institutional investors and family offices, but also individual accredited investors who are just starting to build their portfolios.
While we recommend investors to stay invested for a minimum of 3-5 years in order to reap the benefits of a strategy like this, Golden Horse provides flexibility for investors, depending on their investment goals.
We would typically advise investors to consider partnering with us if they have a risk appetite of about 25 – 30% and are looking for a long-term investment vehicle that will yield annualised target returns of about 30%.