The CTO at $55 billion asset manager Cohen & Steers explains why AI is 'in the middle of a hype cycle,' and what he's investing in instead
Cohen & Steers
- Artificial intelligence is 'right in the middle of a hype cycle,' the chief technology officer at asset manager Cohen & Steers told Business Insider.
- The publicly-traded asset manager is investing in technology infrastructure like cloud computing instead of artificial intelligence.
Artificial intelligence is "right in the middle of a hype cycle," said the head of technology for asset manager Cohen & Steers.
Chief technology officer Dan Longmuir told Business Insider in a recent interview that his firm is focused on building up its internal infrastructure, staying away from artificial intelligence.
"People are having a very high hit and miss rate with it, and that's really not what we want," Longmuir said. "There are a lot of people trying to take what they've done algorithmically for the last 15 years and saying 'let's do this with artificial intelligence.' Is it going to generate more alpha? No. That's not what machines are good at."
Other managers have had mixed success integrating artificial intelligence. Investors in strategies with environmental, social, and governance considerations, for example, are incorporating the technology into their investment processes, but are also bumping up against its limitations.
Instead, the firm is looking at tech upgrades "that aren't going to turn us into a quant shop, but that will help us with the active management of the portfolio," Longmuir said. That includes tools to narrow the universe of stocks so that analysts are spending their time on the right subset of equities.
Longmuir is also working on cloud computing to improve security, access, and business continuity, which he said is a precursor to doing more work in artificial intelligence.
Joe Harvey, the firm's president and chief investment officer, said more robust IT helps with efficiency and allows the firm to use broader data sets and to integrate quantitative techniques, which improves results.
"IT and AI and the like are not silver bullets for underperforming managers to turn around performance and prevent the competition from indexing/ETFs," Harvey said.
Cohen & Steers, which invests in liquid real assets like real estate investment trusts, managed $54.8 billion as of December 31.
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